CoinDesk Crypto

A coming listing on Coinbase Pro has brought a boost to yEarn.Finance’s already highly priced token.

• The YFI token soared an additional $6,000 – more than half the current price of a bitcoin – on the news it will be listed on the more advanced level “Pro” exchange.
• Coinbase announced Thursday it will begin accepting deposits for the decentralized finance (DeFi) coin on from next week.
• In response, YFI tokens jumped approximately 10% from just over $29,000 to nearly $35,000 in the space of a couple of hours.
• Most tokens listed on Coinbase have experienced, to varying degrees, a market increase in price, a market phenomenon called the “Coinbase Effect.”
• Today’s market movement shows the Coinbase name, once closely associated with its reputation for listing very few digital assets, still carries considerable influence in the cryptocurrency market.
• YFI has since tracked back slightly to $32,800 by press time.
• yEarn is a decentralized investment protocol that identifies and executes various DeFi-related trading strategies using digital assets deposited by users.
• Since launch in June, total value locked in yEarn has skyrocketed from $2.5 million to well over $1 billion at press time, according to its website.
• Liquidity providers receive YFI tokens for providing certain tokens and give holders a say on the direction of the protocol.
• Since it began circulating in mid-June, the token has moved from approximately $800 to its current valuation – making it one of the most valued tokens in the digital asset class by price.
• Although the price of an individual YFI token is roughly three times that of a single bitcoin, there are only 30,000 YFIs in circulation, meaning its $983 million market cap is dwarfed by bitcoin’s $190 billion cap.
• yEarn’s founder, Andre Cronje, unveiled a whole new protocol this week that would allow users to borrow digital assets from a liquidity pool, using staked stablecoins as collateral.

• Coinbase Pro said it will launch the yEarn order book in four phases once there’s enough liquidity, and will only open up full trading once it’s satisfied there’s a “healthy and orderly market.”
• Excepting New York State, YFI will be available in all existing Coinbase jurisdictions. The exchange has not yet confirmed whether YFI will be listed on its retail-orientated exchange.
• Coinbase listed the "COMP" governance token from Compound in mid-June – which in the frothy market conditions at the time contributed to its price spiking to over $350 before it corrected back to $200 just days later.

See also: First Mover: DeFi ‘Vampire’ SushiSwap Sucks $800M from Uniswap; BitMEX Basis Lags

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A Singapore man has received a sobering sentence for his involvement in the theft of S$365,000 (US$267,097) in cash meant for a bitcoin purchase.

• As reported by The Strait Times on Friday, Jaromel Gee Ming Li, 29, was sentenced to three years in prison and 12 strokes of the cane on Thursday.
• Gee pleaded guilty to one count of engaging in a conspiracy to commit robbery with the aid of two other men, Mohd Abdul Rahman and Syed Mokhtar, both 39 years of age.
• According to the report, Gee was engaged in bitcoin brokerage and organized transactions between parties seeking to buy and sell bitcoin.
• Gee solicited Abdul Rahman to assist him with transactions that generally involved potential buyers of bitcoin for larger sums of cash, but in April 2018 they reportedly switched tactics to rob prospective buyers.
• Hearing that Pang Joon Hau, a Malaysian man, had arrived in Singapore for a bitcoin purchase with the S$365,000 in cash, Gee directed Abdul Rahman and Mokhtar to locate the investor in his hotel and rob him on April 8.
• Abdul Rahman and Mokhtar proceeded to physically assault Pang and another bitcoin investor Teo Chern Wei in their hotel room before running off with a backpack containing Pang’s cash.
• Gee was arrested on April 18, 2018, – it is unclear how authorities discovered Gee’s involvement in the robbery.
• Abdul Rahman was arrested days after the attack and his case is still pending; Mokhtar pleaded guilty to a robbery charge on Wednesday, The Straights Times reported.
• Rahman’s ex-wife, Yogeshwry Raman, was also in court Thursday facing charges she’d received stolen good such as a S$45,800 (US$33,000) Rolex watch bought with proceeds from the robbery.
• In Singapore, those convicted of committing robbery between 19:00 and 07:00 local time can be jailed for up to 14 years and receive at least 12 strokes of the cane.

See also: Singapore Man Fined $72K for Promoting Crypto Ponzi OneCoin

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• Bitcoin Holds Firm Above $10K but Strong Bounce Proves Elusive
• Coinbase Effect Hits DeFi as yEarn’s YFI Token Surges 10% on Pro Listing News
• Bitstamp Integrates Nasdaq’s Matching Engine for Faster Order Executions
• Market Wrap: Bitcoin Hits $10.4K; Ether Balances on Exchanges Fall to 7-Month Low

Cryptocurrency exchange Bitstamp has implemented a new matching engine from Nasdaq’s technology vendor that it says greatly speeds up trading.

• Announced Thursday, the updated matching engine improves upon Bistamp’s previous implementation developed by global provider of exchange and clearing technology Cinnober – since acquired by Nasdaq
• With the upgrade, “Bitstamp can continue to bolster their capacity, performance and resiliency,” said Andy Green, vice president and head of the EMEA division at Nasdaq Market Technology.
• The move should help the platform handle high levels of demand during periods of extreme volatility when volume spikes from multiple orders can put a strain on infrastructure.
• According to research by Bitstamp and crypto market data provider Kaiko, the new engine enables order matching up to 1,250 times faster than with the previous system.
• The platform’s throughput is also raised by up to 400 times, per the announcement.
• The improvements are expected to be noticeable by high-frequency traders, while the new infrastructure will enable the exchange to roll out new order types and trading pairs at scale, Bitstamp said.
• The exchange plans to increase the platform’s performance gradually over the next three months, reducing latency on orders placed through their website and app.
• Potentially, the biggest impact could be to application programming interface (API) trading where the exchange aims to reduce trade execution to under a millisecond.
• Luxembourg-based Bitstamp recently went live with payment service provider BCB Group’s real-time gross settlement system in order to speed up the funding of large client accounts.

See also: Bitstamp to Move Clients’ Accounts From London to Luxembourg

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• Coinbase Effect Hits DeFi as yEarn’s YFI Token Surges 10% on Pro Listing News
• Singapore Man Caned for Stealing $267K From Bitcoin Investor
• US Congressman Darren Soto to Accept Cryptocurrency Donations for 2020 Election
• Square Forms Group to Stop Patent Hoarding From Stifling Crypto Innovation

A European Central Bank (ECB) panel tasked with exploring a central bank digital currency (CBDC) is set to reveal its findings in the near future, followed by a public consultation, said ECB President Christine Lagarde.

Speaking at the Deutsche Bundesbank’s conference on banking and payments in the digital world Thursday, Lagarde addressed the competition to dominate payments on a global scale and considerations for a euro-zone retail CBDC.

Lagarde said a digital euro would allow the bloc to be at the cutting edge of innovation, but the lack of payments integration in Europe indicated that foreign providers have taken the lead. Economies around the world are looking into CBDCs and the creation of digital payment ecosystems, while China has become a leader in the space. 

Related: Former Central Bank Official: Japan Should Take a Digital Yen Seriously

“Europe has fallen behind in this competition,” Lagarde said. 

The ECB set up a task force in early 2020 to explore what a digital euro would look like. In May, ECB Executive Board member Yves Mersch told CoinDesk the task force was specifically looking into a retail CBDC (one that could be used by the public to purchase goods and services) as opposed to a wholesale currency (that can only be used by financial institutions). Lagarde confirmed this at Thursday’s event. 

“Digital wholesale money is not new, as banks have been able to access central bank money for decades. But new technology can be used to make settling financial transactions more efficient. It also opens the possibility of a retail CBDC, which would be very innovative in that it would be accessible to a wide audience,” Lagarde said. 

Retail CBDCs

According to Lagarde, a digital euro would be a complement to and not a substitute for cash. Europe will continue to ensure that all its citizens have access to banknotes at all times, Lagarde said, adding that the two combined would support financial inclusion and offer consumers a choice. 

Related: Brazil’s Central Bank Says Nation Might Be Ready for a Digital Currency by 2022

The second consideration for introducing a digital euro is risk assessment, Lagarde said. In her view, if enough bank deposits are converted to digital euro, it will change the way the traditional banking sector supplies money to the economy as well as the way in which the ECB will have to implement monetary policy.  

“We need to ensure that a digital euro, in the event that it is introduced, is designed in a way that contains these risks,” Lagarde said. 

Lastly, a digital euro would need to be designed to meet public demand for digital payments, without damaging private payment solutions, Lagarde added. 

Read more: Brazil’s Central Bank Says Nation Might Be Ready for a Digital Currency by 2022

Lagarde said central banks inspire more trust in people compared to commercial banks, referring to a recent survey by the Official Monetary and Financial Institutions Forum, and stood by a previous statement that the ECB will play an active role in the creation and issuance of a CBDC.

“It would have to embrace the respective strengths of both the Eurosystem and the private sector to ensure that the payments landscape remains competitive and innovative,” Lagarde said.

Europe still hasn’t made a decision on whether to introduce a digital euro, Lagarde said. But according to her, the findings of the task force are due soon, and the region will continue to explore the benefits, risks and operational challenges of a CBDC.

“We have a duty to play an active role in balancing the risks and benefits of innovation in payments, so that money continues to serve Europeans well,” Lagarde said.

Related Stories

• Government of Bermuda Pilots Stimulus Token in Response to COVID-19 Crisis
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A European Central Bank (ECB) panel tasked with exploring a central bank digital currency (CBDC) is set to reveal its findings in the near future, followed by a public consultation, said ECB President Christine Lagarde.

Speaking at the Deutsche Bundesbank’s conference on banking and payments in the digital world Thursday, Lagarde addressed the competition to dominate payments on a global scale and considerations for a euro-zone retail CBDC.

Lagarde said a digital euro would allow the bloc to be at the cutting edge of innovation, but the lack of payments integration in Europe indicated that foreign providers have taken the lead. Economies around the world are looking into CBDCs and the creation of digital payment ecosystems, while China has become a leader in the space. 

Related: Former Central Bank Official: Japan Should Take a Digital Yen Seriously

“Europe has fallen behind in this competition,” Lagarde said. 

The ECB set up a taskforce in early 2020 to explore what a digital euro would look like. In May, ECB executive board member Yves Mersch told CoinDesk that the taskforce was specifically looking into a retail CBDC (one that could be used by the public to purchase goods and services) as opposed to a wholesale currency (that can only be used by financial institutions). Lagarde confirmed this at Thursday’s event. 

“Digital wholesale money is not new, as banks have been able to access central bank money for decades. But new technology can be used to make settling financial transactions more efficient. It also opens the possibility of a retail CBDC, which would be very innovative in that it would be accessible to a wide audience,” Lagarde said. 

Retail CBDCs

According to Lagarde, a digital euro would be a complement to and not a substitute for cash. Europe will continue to ensure that all its citizens have access to banknotes at all times, Lagarde said, adding that the two combined would support financial inclusion and offer consumers a choice. 

Related: Brazil’s Central Bank Says Nation Might Be Ready for a Digital Currency by 2022

The second consideration for introducing a digital euro is risk assessment, Lagarde said. In her view, if enough bank deposits are converted to digital euro, it will change the way the traditional banking sector supplies money to the economy as well as the way in which the ECB will have to implement monetary policy.  

“We need to ensure that a digital euro, in the event that it is introduced, is designed in a way that contains these risks,” Lagarde said. 

Lastly, a digital euro would need to be designed to meet public demand for digital payments, without damaging private payment solutions, Lagarde added. 

Read more: Brazil’s Central Bank Says Nation Might Be Ready for a Digital Currency by 2022

Lagarde said central banks inspire more trust in people compared to commercial banks, referring to a recent survey by the Official Monetary and Financial Institutions Forum, and stood by a previous statement that the ECB will play an active role in the creation and issuance of a CBDC.

“It would have to embrace the respective strengths of both the Eurosystem and the private sector to ensure that the payments landscape remains competitive and innovative,” Lagarde said.

Europe still hasn’t made a decision on whether to introduce a digital euro, Lagarde said. But according to her, the findings of the task force are due soon, and the region will continue to explore the benefits, risks and operational challenges of a CBDC.

“We have a duty to play an active role in balancing the risks and benefits of innovation in payments, so that money continues to serve Europeans well,” Lagarde said.

Related Stories

• Government of Bermuda Pilots Stimulus Token in Response to COVID-19 Crisis
• Fed Chair Powell’s Jackson Hole Speech Could Hint at US Dollar’s Future

Japan is in no rush to digitize the yen but there are reasons the country should think seriously about a central bank digital currency (CBDC), said Tetsuya Inoue, formerly of the Bank of Japan (BoJ) and now a chief researcher at the Nomura Research Institute. Inoue is the author of a book on a digital yen. 

• Inoue told CoinDesk Japan in a recent interview that as Japanese banknotes are highly trusted, and there isn’t a considerable unbanked population, there is no rush to issue a digital currency. 
• In March 2020, BoJ Deputy Governor Masayoshi Amamiya asserted that advanced economies like Japan have no need for a digital currency, and a CBDC will have little merit.
• But in 2019, the government took initiatives to promote cashless payments across the country by offering rewards as incentives, and earlier this year, Japan set up a digital currency group to research a possible CBDC. 
• Japan should not ignore the growing global interest in digital currencies, Inoue said, because the technology that would support such a currency would also support financial services that use the digital currency as infrastructure, creating network externalities (the increase in demand for a product or service as more people begin to use it). 
• Once the entire system originating from another country has a monopoly status, it is difficult to replace it, Inoue said. This plays a role in the battle for hegemony by major countries. 
• Even though Japan could still maintain its yen, if another country establishes a strong digital financial ecosystem, Japan will have to rely on it to process domestic payments securely and efficiently, undermining the competitiveness of its own financial services, he added.  
• When asked about concerns around personal data usage, Inoue said there would have to be a tradeoff: If people are providing their information in exchange for improved convenience and service, then the gain has to be calculated accordingly.
• Going forward, governments should further promote digitalization not only for the short-term purpose of recovering economic activity, but also for the long-term stability of economic society, Inoue said. 
• By July 2020, BoJ had changed its tune with an official saying research into a potential CBDC is now a “top priority.”

Read more: Bank of Japan Puts Top Economist in Charge of Digital Yen Initiative

Related Stories

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• Japanese Financial Giant SBI Holdings Launches Short-Term Crypto Derivatives

Within a week of going online, DeFi project SushiSwap’s total value locked (TVL) surpassed $1.5 billion. At its peak, it made up almost 70% of liquidity on the decentralized exchange Uniswap. SushiSwap only took seven days to launch. This article was originally published by CoinDesk China on Tuesday.

SushiSwap co-founder 0xMaki (later referred to as Maki) once proudly said, “It took Uniswap two years to get to where it is today, it only took us 7 days.” 

SushiSwap’s founding team is extremely small, with only three people: Chef Nomi (later referred to as Chef), sushiswap and 0xMaki. The first two are responsible for code and product development, while the latter is responsible for growth and operations. 

Related: Bitcoin News Roundup for Sept. 10, 2020

Last Saturday, SushisSwap co-founder Chef suddenly sold all the tokens that were supposed to be used for a development fund without notifying the community. This move sparked dissatisfaction and doubt in the community, and SUSHI’s price plummeted. 

As doubts in the community continued to grow, Chef decided to transfer the Admin Keys to FTX CEO Sam Bankman-Fried (later referred to as Sam), and left a message saying “I am a good person.”

After Sam took over the management key, he and Maki organized the code migration and multi-signature validator voting.

SushiSwap has since completed migrating its users’ funds from Uniswap and turned control over to nine well respected users who can approve changes and expenditures as a group.

Related: Uniswap September Volume Tops August’s $6.7B Record in 10 Days on Dizzying DeFi Demand

Earlier this week, CoinDesk China published an exclusive interview with Maki, the only remaining SushiSwap founding team member. The interview, which is slightly edited, covers Maki’s opinions on Chef’s sale of the development funds and Sam’s management authority, as well as SushiSwap’s development plan after Chef’s departure.

CoinDesk China: Let’s start with a self-introduction. Who are you, and what do you do in SushiSwap? 

Maki: I’m a full-stack engineer, but in SushiSwap I’m responsible for growth and operations. For the time being, I don’t want to disclose too much about my real identity. If it becomes necessary later, I will disclose it, now it is too early.

CoinDesk China: In your opinion, why did SushiSwap explode online?

Maki: On the first day we went online, we had the Quantstamp audit report, which contained no major defects. The security audit report is very helpful to the growth of our TVL.

CoinDesk China: What are your short-term goals?

Maki: Our short term goal is to successfully complete the migration, this is very important. [Note: The migration was completed on Wednesday].

Later we will discuss governance with the community, in order to make the project develop smoothly and not fail. 

We will also optimize the user interface (UI) of SushiSwap, such as launching a Chinese UI, introducing more traders, and adding features that UniSwap does not have.

More important, we will start integrating with other DeFi protocols. For example, the integration with renBTC’s native system, which would allow users to directly convert BTC to renBTC on SushiSwap. Another example is that if we integrate with 1inch, they can route more transactions to us because we have better liquidity.

I am a believer in Ethereum, but I am open-minded about other public chains as well, I also hope to launch SushiSwap on public chains like Polkadot and Solana. 

We want to create the best, most user-friendly DEX.

CoinDesk China: When did you first start learning about cryptocurrency and blockchain?

Maki: As early as 2013, someone introduced me to Bitcoin. 

CoinDesk China: Why did you decide to join SushiSwap?

Maki: After reading a SushiSwap article on Medium, I felt that “Community Uniswap” is an indispensable part of the DEX ecosystem, so I contacted Chef and expressed my willingness to join.

When I joined, staking, migration and governance contracts were all ready. Chef did not give me Github permissions, so I started directly preparing to work on market and operations.

My work at SushiSwap is completely voluntary. Now I only hold ETH and YFI, I don’t have SUSHI tokens, nor participate in SUSHI liquidity mining. I value the success or failure of SushiSwap more than personal gains and losses.

I have participated in YAM and YFI mining. Although I have not yet reached financial freedom, I’m not short on money.

CoinDesk China: What is your personal opinion of Uniswap? 

Maki: I think Uniswap is very good. Its founder Hayden Adams is a person I really admire. 

I think we will coexist with Uniswap. There definitely will be multiple players on this track. In addition to Uniswap and SushiSwap, there will be other DEXes as well. 

CoinDesk China: Do you personally know Chef? Are Chef and sushiswap the same person? 

Maki: I saw SushiSwap’s introduction article on Medium, and after finding it very interesting I joined its Discord group. I was the third person to join, after Chef and sushiswap. I don’t think they are the same person, but they are probably two people who know each other in real life. 

CoinDesk China: Many people on the Internet are saying, Chef is actually FTX CEO Sam, is that true?

Maki: No, Sam joined later. I don’t believe Chef and Sam are the same person. 

CoinDesk China: Are you disappointed by what Chef did?

Maki: Chef sold all the tokens that were supposed to be used for a development fund, which is very surprising. At the beginning, Chef said that he didn’t come to make fast money, he was thinking about the community … I now think he’s all talk, and I am not sure of his original intention…

In the end he cashed out, but he also transferred the administrator authority to Sam, but his behavior caused the price of the SUSHI token to plummet.

CoinDesk China: Do you think Chef and sushiswap contributed to the project?

Maki: They just copied Uniswap and YAM’s code, I don’t think they invested a lot in this project. They were more thinking about how to make fast money, without a long-term vision.

But I still thank them for giving me an opportunity to participate in this project, though it is forked out of other projects. 

I think SushiSwap could be made into a great project, so I’m willing to continue to support it. In the Ethereum community, I’ve also met a lot of great people, they have always encouraged me and we will continue to build this project together. 

CoinDesk China: After Sam took over management authority, what was the division of labor between you and Sam?

Maki: Later I will “guide” the development of the entire project…It is up to the community to make decisions, I only make suggestions .

CoinDesk China: What is your opinion of Sam’s management authority?

Maki: I am satisfied with the result. At the very beginning, Chef said he wanted to give management authority to me, but I wasn’t very confident in my own technical strength. I wasn’t sure that I would be able to make SushiSwap’s migration a success. 

Later, I suggested that Chef consider giving management authority to Andrew Kang or Sam, they both have a better understanding of technology, and are also very interested in this project. Sam also holds a lot of SUSHI, so he is financially motivated to do a good job in operating and managing this project. 

After the migration is completed and the multi-signature board of directors is determined, I think he will transition from the role of administrator to an ordinary community member. After that, I will mainly be responsible for leading this project to the next stage. Slowly, I will also fade out and gradually decentralize this project.

Related Stories

• First Mover: DeFi ‘Vampire’ SushiSwap Sucks $800M from Uniswap; BitMEX Basis Lags
• SushiSwap Migration Ushers in Era of ‘Protocol Politicians’

Bitcoin was trending upward before losing momentum; ether holders are moving their cryptocurrency off exchanges.

• Bitcoin (BTC) trading around $10,284 as of 20:00 UTC (4 p.m. ET). Slipping 0.12% over the previous 24 hours.
• Bitcoin’s 24-hour range: $10,174-$10,488
• BTC below its 10-day but above 50-day moving averages, a sideway signal for market technicians.

Bitcoin continued its upward momentum from Wednesday, with the world’s oldest cryptocurrency rising as high as $10,488 on spot exchanges such as Coinbase before losing some steam and now moving in a sideways pattern. 

Constantin Kogan, partner at crypto fund of funds BitBull Capital, points to bitcoin’s relative strength index, or RSI, as an indicator of where the market might be headed. RSI measures price changes to indicate market conditions, such as “overbought” when there has been too much buying or “oversold” when there is too much selling. 

Related: Privacy Startup Nym Will Pay You in Bitcoin to Run Its Mixnet

Read More: Structural Issues May Be Causing BitMEX’s Low Bitcoin ‘Cash and Carry’ 

“The relative strength index has shifted in favor of growth after the price climbed to $10,355,” said Kogan. “There is a chance to return to the pivotal area of $10,756, but not everything is as rosy as we would like to see.”

Kogan said bitcoin price action will depend on the global economy’s performance for the balance of 2020. 

“Many analysts predict that BTC will continue to rise in price in the long term,” Kogan added. “However, this year a breakthrough is unlikely. It is expected next year if we won’t see a global recession escalation.” 

Related: Binance’s New Platform Will Connect CeFi and DeFi With $100M Fund

Read More: Pandemic Will Speed Bitcoin Adoption, Says DBS Bank Economist

In bitcoin futures, open interest has been hanging around the $3.7 billion mark for the past week. 

“This represents a lot of indecision in the BTC market,” said Daniel Koehler, liquidity manager for cryptocurrency exchange OKCoin, regarding the stasis in bitcoin futures. “I think many larger players hedged at these high price levels and are waiting for momentum to clearly go in one direction.”

Read More: YouTube Ignored Warnings About XRP ‘Giveaway’ Scams, Ripple Says

Henrik Kugelberg, a Swedish over-the-counter crypto trader, points to the longer-term outlook of bitcoin versus fiat’s performance. “The macro perspective is of course that all currencies will lose value and the only hedge in the currency market the coming months is bitcoin.” 

Indeed, the U.S. Dollar Index, a measure of the American currency against a basket of other fiat, is still in the doldrums, down 0.30% Thursday. 

Italy-based over-the-counter crypto trader Alessandro Andreotti said he isn’t sure the bitcoin price can keep heading upward but he remains bullish. “Opinion seems split on whether this is just a ‘bear trap’ or the beginning of a new bull market,” he told CoinDesk. “I’m buying either way. Personally, I’m optimistic for the short term.” 

Ether balances on exchanges dropping

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Thursday, trading around $364 and climbing 2% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Ether Traders May Be Hedging Against DeFi Slowdown: Analyst

The balances of ether on centralized exchanges is at a seven-month low. On Wednesday, 17,158,739 ETH sat on exchanges, the lowest it had been since Feb. 9, according to data from aggregator Glassnode. 

“My immediate thought is that many people have moved their ETH off exchanges to be able to participate in yield farming,” said Andrew Tu, an executive at quant trading firm Efficient Frontier. “A load of other traders likely moved their ETH to be able to provide liquidity to Uniswap pools. SushiSwap is a prime example of this.” 

Read More: DeFi ‘Vampire’ SushiSwap Sucks $800M from Uniswap

Other markets

Digital assets on the CoinDesk 20 are mixed Thursday. Notable winners as of 20:00 UTC (4:00 p.m. ET): 

• nem (NEM) + 5.2%
• qtum (QTUM) + 3.4%
• cardano (ADA) + 3.2%

Read More: 1,000 New Token Pairs Added to Uniswap in One Week; Buyers Beware

Notable losers as of 20:00 UTC (4:00 p.m. ET): 

• tron (TRX) – 5.3%
• bitcoin sv (BSV) – 3.7%
• orchid (OXT) – 1.2%

Read More: SushiSwap Migration Ushers in Era of ‘Protocol Politicians’

Equities: 

• Asia’s Nikkei 225 ended the day in the green 0.88% as positive Japanese manufacturing numbers gave uplifted investor sentiment.
• Europe’s FTSE 100 closed in the red 0.16% as tensions between the European Union and the United Kingdom rose over Brexit negotiations.
• In the United States, the S&P 500 slipped 1.9% as tech stocks experienced a sell-off on a volatile day, with Apple gaining as much as 2.7% intraday before closing down 3.9%.

Read More: How to Watch INX’s IPO in Real Time on the Ethereum Blockchain

Commodities:

• Oil is down 1.8%. Price per barrel of West Texas Intermediate crude: $37.06.
• Gold is flat Thursday, in the red 0.10% and at $1,944 as of press time.

Read More: Uniswap September Volume Tops August’s $6.7B Record in 10 Days 

Treasurys:

• U.S. Treasury bond yields all slipped Thursday. Yields, which move in the opposite direction as price, were down most on the two-year, in the red 5.3%.

Read More: Why Crypto Investments Are Less Vulnerable to US-China Tensions

Related Stories

• First Mover: DeFi ‘Vampire’ SushiSwap Sucks $800M from Uniswap; BitMEX Basis Lags
• Ether Traders May Be Hedging Against DeFi Slowdown: Analyst

Nym now allows bitcoin transactions and has an incentive program for people running its nodes. It is also enabling plugins that will allow users to plug in wallets and applications to run their traffic through its mixnet. 

What is a mixnet?

Nym is a start-up software project working to obscure metadata tracking at a network level via the mixnet it enables. The mixnet itself is hosted by a decentralized network of volunteers.

On a normal internet network, most traffic can be tracked. Browsers like Tor offer a degree of protection against network surveillance by running traffic through a number of relays to obscure a user’s location and usage. Such networks are still susceptible to metadata observation, however, meaning highly capable adversaries like the National Security Agency in the U.S. are able to see the timing of data packages being sent across a network to get an idea of what’s going on, even if they can’t see the actual contents of the packages. 

Related: Market Wrap: Bitcoin Hits $10.4K; Ether Balances on Exchanges Fall to 7-Month Low

It’s like when the NSA was tracking alleged terrorists’ phone calls in the U.S. While they weren’t eavesdropping on the calls themselves, they were looking at those involved in the calls as well as the duration of the calls and other details. 

See also: Road to Consensus: Harry Halpin Talks Holistic Privacy, Mixnets and COVID-19 (of Course)

A mix network or “mixnet,” on the other hand, (taking its name from the proxy servers it employs, called “mixes”) obscures the metadata left behind when data passes through a network. 

“In a mixnet all the data packets get shuffled around, and then it’s emitted in a different order than [how] they came in, with a small delay,” said Dave Hrycyszyn, CTO of Nym. “Basically a mixnet acts like a game of Yahtzee, where the dice are data packs, they get shaken around on the mixnet and come out in an entirely different manner than they went in.” 

Related: Binance’s New Platform Will Connect CeFi and DeFi With $100M Fund

Doing that multiple times, said Hrycyszyn, makes it impossible for an attacker monitoring all the network traffic on the internet to see who’s communicating with whom.

Incentives paid in bitcoin

Nym has largely been focusing on its testnet, with node operators hosting them as a labor of love. Now, Nym will compensate operators using bitcoin rather than tokens. One way it offers rewards is through L-BTC on the Liquid sidechain using the Blockstream Green wallet. Liquid offers on-chain privacy using confidential transactions, which obscure the amounts being paid. For those who don’t have or want a Blockstream Green wallet, Nym will reward operators with standard bitcoin because Nym doesn’t want to force anyone to adopt a particular wallet. It will also be launching an incentivized bounty program to test the network’s strength. 

Nym is also launching its own reputation system, NYMPH, which lets it and node operators keep track of which mixnodes are online and mixing data packs, even across multiple chains. 

The company is also adding greater functionality for running transactions and web traffic over its mixnet. 

Read more: Europe Debates COVID-19 Contact Tracing That Respects Privacy

“Nym is plug-and-play replacement for Tor for any wallet that supports SOCKS5, or any application that supports SOCKS5,” said Nym CEO Harry Halpin.

For example, the Nym team has streamed video through Firefox on the network, though Halpin says that is still experimental at this point. 

SOCKS is a protocol that exchanges network packets between device and server via a proxy. 

“What Nym does is, just like Tor, start a SOCKS5 client up on your local machine. You send all your traffic from the app there. It transforms it into Sphinx packets (the same format Lightning uses, but invented for mixnets) and sends the traffic through the Nym mixnet,” he said. 

‘A step forward’ for privacy

Adam Back, CEO of Blockstream, said in a statement that Nym’s mixnet technology looks promising as a modern upgrade to Tor and is a step forward in terms of privacy. 

“Network privacy is a crucial component to ensuring the financial privacy of Bitcoin users, so we were very happy to collaborate with Nym on its integration with Liquid,” he said. 

“Nym’s SOCKS5 architecture made adding Blockstream Green wallet support easy, and we’ll keep an eye on the project with a view to adding standalone support in the future.”

Read more: New Malware Spotted in the Wild That Puts Cryptocurrency Wallets at Risk

These are important steps for mixnets, which aren’t in regular use right now and are traditionally fairly slow and clunky. The slowness is in part due to disrupting the timing of data packet delivery to foil network-level observers.

Nym recognizes that while this is important progress, it’s not a privacy panacea.  At least, not yet. 

“We do not recommend depending on the Nym mixnet for strong privacy yet,” said Hrycyszyn in a post announcing the updates. “We are working to get sender and receiver anonymity coded up, after which a full audit will be needed. But we are making very steady progress, and we invite you to try the mixnet today and give us feedback about how things go.”

Related Stories

• First Mover: DeFi ‘Vampire’ SushiSwap Sucks $800M from Uniswap; BitMEX Basis Lags
• Structural Issues May Be Causing BitMEX’s Low Bitcoin ‘Cash and Carry’ Returns

Binance continues to chase after decentralized finance (DeFi) by giving its new decentralized Binance Smart Chain (BSC) access to its centralized exchange (CeFi). The global cryptocurrency exchange giant is putting up $100 million to support DeFi projects on BSC.

• Binance CEO Changpeng Zhao announced the plan during the company’s World of DeFi summit on Thursday. It’s a “bridge” between DeFi and CeFi, an integration between Binance, the exchange, and BSC, the Binance-owned public chain.
• Binance’s users can benefit from elements of CeFi – futures, margins, savings, DeFi staking and DeFi pooling – and DeFi – lending, automated market makers, liquidity mining, yield farming – according to the company’s news release Thursday.
• This new plan targets Binance users who want to participate in DeFi without leaving the centralized platform.
• Under the new platform, holders of Binance’s native token, BNB, can have more rights to the decentralized governance of the BSC, which uses a Proof-of-Stake Authority (PoSA) consensus mechanism, when they participate in staking on the BSC.
• Since the popular crypto exchange first ventured into DeFi with its decentralized exchange in April 2019, Binance has continued expanding its footprint in this space.
• Earlier this month, Binance introduced a product called Launchpool to provide users a way to make income by staking tokens for yield farming – the trendy strategy to make profits in DeFi.
• It also launched a Uniswap-like DeFi platform allowing trades on an automated market maker (AMM).

Read more: For DeFi to Grow, CeFi Must Embrace It

Related Stories

• The Revolution You’ve Been Awaiting: Fintech + DeFi
• First Mover: DeFi ‘Vampire’ SushiSwap Sucks $800M from Uniswap; BitMEX Basis Lags
• Ether Traders May Be Hedging Against DeFi Slowdown: Analyst
• Structural Issues May Be Causing BitMEX’s Low Bitcoin ‘Cash and Carry’ Returns

The U.S. Treasury Department’s Office of Foreign Asset Control (OFAC) has added three Russian nationals and a host of cryptocurrency addresses to its sanctions list on allegations of election interference.

OFAC alleges that the three individuals, Artem Lifshits, Anton Andreyev and Darya Aslanova, are employees of the Internet Research Agency (IRA), a Russian company and “troll farm” that tries to influence events. The IRA attempted to influence the 2018 midterm elections in the U.S., and OFAC alleged Thursday that this work continued.

“The IRA uses cryptocurrency to fund activities in furtherance of their ongoing malign influence operations around the world,” a press release said.

Related: US Congressman Darren Soto to Accept Cryptocurrency Donations for 2020 Election

A separate release listed 23 crypto addresses as being added to OFAC’s sanctions list, meaning any U.S. person who tries to send or receive money from these accounts might be subject to criminal proceedings. The wallets contained a slew of cryptocurrencies, including bitcoin, ether, zcash, dash, bitcoin SV and litecoin, according to the OFAC press statement.

The U.S. Department of Justice (DOJ) separately charged Lifshits with wire fraud, alling he is part of “Project Lakhta,” an election interference effort based in Russia. According to the DOJ, Lifshits opened “fraudulent accounts” at banks and cryptocurrency exchanges by stealing U.S. citizens’ identities. The Secret Service assisted in the investigation as well.

This is not the first time government agencies have alleged that Russian operatives used cryptocurrency to interfere with U.S. elections: a group of military intelligence officers were indicted in 2018 for efforts to influence the 2016 presidential election, including by hacking networks and email accounts used by Democratic candidate Hillary Clinton.

Read more: US Treasury Department Blacklists 20 Bitcoin Addresses Tied to Alleged North Korean Hackers

Related: Prediction Markets’ Time Has Come, but They Aren’t Ready for It

At the time, then-deputy U.S. Attorney General Rod Rosenstein said the 12 indicted individuals used cryptocurrency to launder funds and pay for their activities.

OFAC has previously listed bitcoin, ether and litecoin addresses as part of its sanctions list, tied to individuals accused of running drugs and participating in ransomware attacks.

UPDATE (Sept. 10, 2020, 18:55 UTC): This article has been updated with a separate DOJ statement, which was published after OFAC’s releases.

Related Stories

• The Anxiety Index: 4 Fear Factors Shaping the Economy
• US Congressman Tom Emmer Will Accept Crypto Donations for Reelection Campaign

Rep. Darren Soto (D-Fla.) – sponsor of a number of legislative proposals around blockchain technology – is accepting cryptocurrency donations for his reelection campaign.

• Soto made the announcement during the U.S. Blockchain Debate on Wednesday, hosted by Soto’s campaign and the Chamber of Digital Commerce PAC.
• Donations will be processed by payments processor BitPay, with eight different cryptocurrency options supported for conversion into U.S. dollars.
• Those include bitcoin (BTC), bitcoin cash (BCH), ether (ETH), Gemini dollar (GUSD), USD Coin (USDC), Paxos standard (PAX), Binance USD (BUSD) and XRP.
• Soto has long been an advocate of blockchain technology, saying the government should support its use for business and consumers, according to a press release.
• Soto, who is also a co-chair of the Congressional Blockchain Caucus, said he was “excited” to host a crypto debate on the same day as a vote to pass parts of the Digital Taxonomy Act.
• The proposal was ultimately passed and added to the wider Consumer Safety Technology Act.
• This will now be debated in the House of Representatives.
• The blockchain portion of the act would require the Federal Trade Commission to submit a report and recommendations to Congress on unfair or deceptive acts relating to digital assets, Soto’s spokesperson told CoinDesk.

See also: Pro-Bitcoin Senate Candidate Wins Primary Race in Wyoming

Related Stories

• US Treasury Sanctions Russians Using Crypto for Election Interference
• Square Forms Group to Stop Patent Hoarding From Stifling Crypto Innovation
• Blockchain Proposals Move to US House in Consumer Tech Bill
• YouTube Ignored Warnings About XRP ‘Giveaway’ Scams, Ripple Says

Cryptocurrency exchange Kraken said Thursday that Jeremy Welch, the co-founder and former CEO of crypto wallet firm Casa, has joined Kraken as vice president of product. 

According to the announcement on Kraken’s website, Welch will work toward making it easier to trade crypto on the exchange. 

• The announcement said Welch will also continue to work with Casa in an advisory capacity, helping the firm grow its non-custodial wallet services. 
  
• Formerly a product specialist at Google, Welch co-founded Casa in 2016 but left the firm earlier this year, citing personal matters. Nick Neuman, the firm’s product head at the time, replaced Welch as Casa CEO. 
  
• On Tuesday, Kraken announced it plans to resume services in Japan by mid-September now that its local subsidiary, Payward Asia Ltd., has completed the required regulatory registration process. 

Related Stories

• Crypto Exchange Kraken Returns to Japan After Two-Year Hiatus
• Digital Rights Advocacy Group Calls On Coinbase for Greater Transparency
• Bison Trails Hires Ex-Goldman Sachs VP as Legal Head
• The DOJ Wants to Hire a Crypto Crime Attorney Adviser

A DBS Bank economist thinks the coronavirus pandemic will accelerate digital asset adoption, Mastercard announced a CBDC testing ground and SushiSwap has a temporary governance structure in place.

Top shelf

Digital adoption
Singapore-based DBS Bank thinks the coronavirus pandemic may speed adoption of digital assets, according to a quarterly report filed in August. “Post-pandemic [investing] is beyond speculative. It’s more about, ‘This thing has fixed circulation, it will not be debased.’ People are worried about dollar outflow and wondering if they should hold crypto in addition to gold as a safe-haven currency,” DBS Chief Economist Taimur Baig told CoinDesk. Baig also noted how cryptocurrencies can help to understand the dynamics of dollar-pegged currencies, while blockchain-tied CBDCs are another front in the politicized battle between the U.S. and China, CoinDesk’s Ian Allison reports. 

Ripple scams
Ripple has contested YouTube’s claims that it knew nothing about the XRP “giveaway” scams, in an attempt to keep its ongoing court case against the platform on the docket. In a motion filed Tuesday, responding to YouTube’s attempt to dismiss the suit, Ripple said it sent 350 takedown notices to YouTube regarding XRP scams using its logo and likeness of CEO Brad Garlinghouse to extort millions from unsuspecting investors. YouTube is accused of “willful blindness,” with Ripple alleging it disregarded or ignored explicit warnings about the scams happening on its platform,” CoinDesk report Paddy Baker said. 

Related: First Mover: DeFi ‘Vampire’ SushiSwap Sucks $800M from Uniswap; BitMEX Basis Lags

Trade war?
Crypto firms and investors may avoid the brunt of the trade war between China and the U.S. In recent months sanctions employed by both countries have interrupted the flow of capital between the nations’ tech industries – affecting non-crypto startups. Decentralized ownership structure and unique fundraising models makes crypto projects immune to geopolitical risks, said Sharlyn Wu, chief investment officer at Huobi. Jump Trading, Paradigm and Pantera are among the U.S.-based firms that successfully invested in Hong Kong crypto startups, while Hashkey participated in BlockFi’s Series C. 

Web3
Swisscom Blockchain, a distributed ledger technology startup owned by telco giant Swisscom, has been awarded a grant from the Web3 Foundation to build a cloud-based protection layer for stakers on the Ethereum-based Polkadot network. Announced Thursday, the grant will help build Swisscom Blockchain’s Kubernetes Operator for Polkadot, a way of protecting participants involved in proof-of-stake processes on Polkadot and the Kusama testnet against losing their staked tokens if the network is attacked or compromised. 

CBDC playground
Payments giant Mastercard has released a platform that allows central banks to test how proposed central bank digital currencies (CBDCs) would work in real life. Mastercard announced Wednesday it had launched a virtual testing environment that can simulate issuance, distribution and exchange of CBDCs between banks and financial service providers, as well as end-consumers purchasing everyday goods and services. Raj Dhamodharan, Mastercard’s executive VP, told Forbes his firm is already working with some central banks and that other entities, such as banks or tech firms, are being invited to use the platform.

Quick bites

• Australian University Finds Privacy Issues With Blockchain Technology (Sebastian Sinclair/CoinDesk)
• Overstock’s tZERO Wins FINRA Approval to Launch Retail Broker-Dealer Subsidiary (Jaspreet Kalra/CoinDesk)
• Belarus Nonprofit Helps Protestors With Bitcoin Grants (Anna Baydakova/CoinDesk)
• The IRS Is Offering You $625,000 to Crack Monero (Shaurya Malwa/Decrypt)
• How a DeFi Trader Made $290,000 With Just $200 (Robert Stevens/Decrypt)

At stake

What’s cooking?
SushiSwap, the vampire clone of Uniswap, successfully began porting over $800 million worth of tokens from its rival platform and instituting a temporary governance structure yesterday.

Related: Blockchain Bites: Bitmain Denied, Coinbase Blocked and a Potential EOS Exit Scam

Nine signers of a multisig wallet controlling Sushi’s funds have been elected to govern SushiSwap through full decentralization, though it’s unclear if all the nominees will accept their position. 

These signatories will act like a board of directors in the analog world, CoinDesk’s Brady Dale reported, requiring six signees to approve changes to the SushiSwap code or to spend its development funds.

It’s a move that reflects Sushi’s original promise to create a community-run alternative to the most successful automated market maker (AMM), Uniswap. Functionally similar to the protocol it forked from, Sushi’s advantage was its decision to include a governance token, which is required for decentralized decision making.

While the results of this successful fork are still playing out, some assume there will be pressure for all DeFi projects to launch or implement a governance token, lest another vampire protocol emerge. Though it’s unclear if Sushi’s success will lead to Uniswap’s demise.

“Maybe the most fascinating observation of the Unisawp/Sushiswap saga so far is, that now BOTH platforms have more liquidity than Uniswap had before Sushi appeared,” Martin Köppelmann, founder of decentralized prediction market Gnosis, tweeted. 

While SushiSwap is taking liquidity currently held by Uniswap, the majority of this capital was placed on Uniswap for the sole purpose of earning Sushi’s incentive program. 

This morning, Uniswap is up $117 million in liquidity, or 46%, over where it was when SushiSwap was announced, Dale tweeted. Or, as author of “The Infinite Machine” Cami Russo said last night: Sushi is “growing the pie.” 

Apart from the flood of liquidity ultimately destined for SushiSwap, Uniswap has been undergoing a spat of user interest.

CoinDesk’s Zack Voell reported the decentralized exchange has added 1,000 new token pairs in the past week. That equates to 150 pairs added per day. 

Exponential growth in the number of tokens and pairs on Uniswap is “a good thing,” according to Jack Purdy, decentralized finance analyst at Messari, as it “shows the power of a completely open, permissionless financial primitives.”

Market intel

Ether puts
Ether (ETH) options traders are turning bearish, placing more than twice as many puts (bearish bets) than calls (bullish bets). Ether’s put-call volume ratio – a measure of activity in put options relative to calls – rose to 2.45 on Wednesday, the highest level since Oct. 31, 2019, according to data source Skew. “The message between the lines is likely that traders want a hedge [via put options] against the activity in DeFi, which has been the primary driver of ether prices,” Vishal Shah, an options trader and founder of Polychain Capital-backed derivatives exchange Alpha5, told CoinDesk.

Cash and carry
BitMEX may be one of the largest crypto derivatives platforms, but it offers the lowest return on bitcoin “cash and carry” trades. Currently, the return offered by Seychelles-based BitMEX on a three-month basis is 2.71% annualized, half of what rival exchanges like Binance, FTX and Deribit are offering, according to data source Skew. Cash and carry arbitrage involves buying an asset in the spot market against a sell position in the futures market when the latter is trading at a premium to the spot price. Essentially, carry strategies profit from futures basis – the spread between prices in futures and spot markets – which evaporates on the day of the expiry.  

Tech pod

Bitcoin bug
A previously undisclosed vulnerability in the Bitcoin Core software could have allowed attackers to steal funds, delay settlements or split the largest blockchain network into conflicting versions had it not been quietly patched two years ago. Braydon Fuller, a protocol engineer at Purse, and Javed Khan, a core developer of the Handshake protocol, discovered the bug in June 2018, finding it affected Layer 2 (L2) solutions such as the Lightning Network but not Bitcoin full nodes. “While the vulnerability was fixed, its disclosure highlights the difficulties of building a global money standard on programming languages created by humans, not to mention the high technical barriers to engaging in development of the top cryptocurrency,” CoinDesk’s Will Foxley reports.

Frog’s vision?
Twetch, a micropayment-based social network that runs on the Bitcoin SV blockchain, has introduced an encrypted direct-messaging function that lets users send each other money in the chat. Released Wednesday, Twetch Chat adds a layer of privacy and security to the Twitter alternative and is in line with a trend toward more private communications that have been a focus of companies in recent years. The service relies on Moneybutton or Relayx BSV wallets, and connects to the PayMail protocol, which creates an email-like ID – instead of the string of numbers and characters typically associated with a wallet.

How to

INX IPO
How’s the first registered offering of security tokens in the U.S. going? CoinDesk’s Nathan DiCamillo shows you how to figure it out for yourself.

In the two weeks since INX Ltd. commenced its long-awaited initial public offering (IPO), more than 350 investors’ Ethereum addresses have been added to the “white list” of approved buyers. You don’t need to take the company’s word for it, it’s all on the blockchain, viewable through block explorer sites like Etherscan. 

The public data doesn’t show who these registered investors are or how many of the tokens, priced at $0.90 each, any of them has agreed to buy. (INX is seeking to raise $117 million through the sale, which is expected to take several weeks to complete.)

But doing an IPO on-chain gives the public, and INX itself, a novel vista on the process, which traditionally has been a back-room affair. 

Podcast corner

‘Absolute Raging Mania’
Hedge Fund legend Stan Druckenmiller joins on the latest edition of The Breakdown to discuss how the Federal Reserve’s policies have created a massive asset bubble while making both inflation and deflation more likely.

Who won #CryptoTwitter? Related Stories

• Blockchain Bites: Is DeFi an Inside Deal?
• First Mover: SushiSwap’s Billion-Dollar ‘Rug Pull’ Is Thriller to Crypto Geeks

Jack Dorsey’s payment company is inviting other cryptocurrency firms to join its “alliance” to pool patents and preserve the industry’s open-source spirit.

• Square said Thursday it has launched what it calls the Cryptocurrency Open Patent Alliance (COPA), a non-profit that wants to stop companies from locking up useful technologies in patents, a practice Square says hamstrings innovation.
• “Locking up foundational cryptocurrency technologies in patents stifles innovation and adoption; and offensive use of patents by bad actors threatens the growth of cryptocurrency technologies,” Square said in a statement.
• In addition to companies jealously guarding their own work in crypto, some firms go further, filing what are called “pre-emptive patents” for ideas they have no plans of developing but which act to hinder the research of competitors.
• To become part of COPA, members must pledge to make their patents freely available to all other members using a shared library.
• This library will act as a “collective shield” protecting members from “patent aggressors,” said Square – which ventured into crypto in 2018 and has already committed to putting its own crypto patents into the new library.
• The only exception will be those filed to preserve existing patent applications.
• The number of cryptocurrency and blockchain-related patents in the U.S. doubled between 2016 and 2017; in the past year, Microsoft filed a patent for a mining system powered by physical exertion and IBM for a token that is a "self-aware."
• Assuming the patent library grows and gathers momentum, the idea is that more and more companies will look to join COPA to access tech innovations – creating a more equitable patent environment.
• Any company that works in crypto, regardless of whether it has patents or not, will be eligible to join COPA.
• COPA will be an entirely separate entity from Square, with its own independent board of directors, a spokesperson confirmed.

See also: Jack Dorsey’s Square Wins Patent for Fiat-to-Crypto Payments Network

Related Stories

• US Congressman Darren Soto to Accept Cryptocurrency Donations for 2020 Election
• Blockchain Proposals Move to US House in Consumer Tech Bill
• YouTube Ignored Warnings About XRP ‘Giveaway’ Scams, Ripple Says
• Australian University Finds Privacy Issues With Blockchain Technology

Uniswap topped August’s record high trading volume in the first 10 days of September, reaching $6,729,691,041 mid-morning on Thursday, leaving almost three weeks to push further into record territory.

• Last month’s $6.7 billion in traded volume was the leading decentralized exchange’s fourth consecutive all-time monthly high, as CoinDesk previously reported.
• Curve, the second-largest decentralized exchange by traded volume, also surpassed August’s record of $1.87 billion Thursday, reaching $1.9 billion, according to Dune Analytics.
• Liquidity on Uniswap, however, has dropped by over 60% to $619 million since Tuesday as the popular SushiSwap project successfully migrated from Uniswap to FTX’s decentralized exchange, Serum.
• Coinciding with Uniswap’s exponential volume growth, market sentiment analysis by cryptocurrency research firm Markets Science shows similar increases in excitement over Ethereum and decentralized finance (DeFi).

• For example, both the quantity of tweets referencing Ethereum and the percentage of those tweets coming from unique Twitter users have steadily increased over the past three months, reaching yearly highs toward the beginning of September, the Markets Science analysis shows.
• Even as decentralized exchange volumes continue to grow, Ethereum transaction fees have dropped 75% from their record highs of $15.21 on Sept. 2.
• The average transaction fee was $3.86 Thursday, according to Blockchair.
• Notably, Uniswap is one of the few decentralized trading platforms without its own token. Still, funding shouldn’t be a problem as on Aug. 6 founder Hayden Adams announced the completion of an $11 million Series A round led by Andreessen Horowitz.

Related Stories

• First Mover: DeFi ‘Vampire’ SushiSwap Sucks $800M from Uniswap; BitMEX Basis Lags
• SushiSwap Migration Ushers in Era of ‘Protocol Politicians’
• 1,000 New Token Pairs Added to Uniswap in One Week; Buyers Beware
• SushiSwap Will Withdraw Up to $830M From Uniswap Today: Why It Matters for DeFi

Two blockchain proposals have been added to a wider piece of legislation on consumer protection after being passed by a U.S. congressional committee Wednesday.

• The House Committee on Energy and Commerce passed a motion Wednesday to incorporate the Blockchain Innovation Act and part of the Digital Taxonomy Act into a broader Consumer Safety Technology Act.
• This adds blockchain technology onto a list of emerging technologies, such as artificial intelligence (AI), that the Department of Commerce (DoC) and Federal Trade Commission (FTC) will be mandated to closely examine so as to identify any potential consumer risks.
• The FTC would be required to file a report with recommendations to Congress on how best to address deceptive practices relating to digital tokens.
• It would also call for a government study to be conducted to determine how technologies, such as blockchain, can combat fraud and other unfair or deceptive practices.
• A statement from Representative Darren Soto (D-Fla.), the bills’ sponsor, said the ultimate aim was to establish a Blockchain Center for Excellence within the DoC.
• “I believe our government needs to support that growth, establish light-touch regulations to ensure certainty, protect innovation, stop fraud and enable its appropriate use for government, business and consumers,” Soto said.
• This is believed to the furthest that a bill on blockchain has ever come in the U.S. Congress.
• The new bill reflects similar comments made by the government’s antitrust chief last week, who said blockchain technology deserves to be protected by law as it could help stop the formation of market monopolies.
• The Consumer Safety Technology Act will now be debated in the House of Representatives.

See also: How a Flurry of ‘Digital Dollar’ Proposals Made It to Congress

Related Stories

• YouTube Ignored Warnings About XRP ‘Giveaway’ Scams, Ripple Says
• Australian University Finds Privacy Issues With Blockchain Technology
• Argo’s H1 Revenue Soars but Profits Drop as Bitcoin’s Halving Boosts Mining Costs
• Judge Dismisses $200M Damages Claim in AT&T Crypto Hack Lawsuit

Bitcoin was rising for a second straight day, to about $10,281, after a rapid sell-off earlier in the week.

“In a flash, investors have gone from running for the hills to buying the dip,” Mati Greenspan, founder of the cryptocurrency and foreign-exchange analysis firm Quantum Economics, told clients in an email. The crypto investment firm Stack Funds wrote in a weekly report that prices appear to have found a temporary floor around $10,000.

Taimur Baig, chief economist for Singapore’s DBS bank, told CoinDesk that the pandemic and the associated central-bank money-printing have strengthened the case for bitcoin. “People are worried about dollar outflow and wondering if they should hold crypto in addition to gold as a safe-haven currency,” he said.

Related: The Revolution You’ve Been Awaiting: Fintech + DeFi

The European Central Bank said early Thursday it would keep monetary policy unchanged for now. European stocks were flat, and U.S. stock futures were lower.

Market Moves

The phenomenon of decentralized finance, known as DeFi, rose to a new level of surreal Wednesday as the semi-automated cryptocurrency trading platform SushiSwap used a technique known as “vampire mining” to suck liquidity away from its industry-leading rival. 

As reported by CoinDesk’s Brady Dale, the SushiSwap project appears to have extracted more than $800 million from Uniswap, which had recently risen to the top of the standings among DeFi projects.  

Sam Bankman-Fried, CEO of the FTX exchange, who took control over the SushiSwap project after its founder apparently cashed out some $13 million of tokens and exited, said the “migration” was complete. That’s polite-speak for what really happened, namely that the project’s design to siphon away liquidity from Uniswap appeared to have succeeded. 

Related: Uniswap September Volume Tops August’s $6.7B Record in 10 Days on Dizzying DeFi Demand

Prices for the SUSHI token, which started trading just two weeks ago, were up 11% to $2.69, for a total market value of about $260 million, according to the website CoinMarketCap.

Uniswap doesn’t have its own tokens, but the website DeFi Pulse showed the protocol’s collateral value plunging by about 74% to $388 million. It has dropped to ninth place in the DeFi rankings. SushiSwap isn’t tracked by DeFi Pulse. 

DeFi, the fast-growing industry of using cryptocurrencies and blockchain technology to build semi-automated lending and trading platforms that might someday replace banks, has seen its total collateral assets climb 10-fold this year to about $7 billion. It has moved so fast that even pros can barely keep up. 

Eric Ervin, CEO of the cryptocurrency-focused hedge fund Blockforce Capital, wrote Thursday that the safest way to bet on the trend might just be to buy ether, the native token of the Ethereum blockchain, where many of the DeFi projects are being developed. 

“We are believers in the long-term potential that DeFi offers for society,” Ervin wrote. “The genie is out of the bottle now. It will be difficult to imagine innovation stepping backward from here.”

Read More: SushiSwap Migration Ushers in Era of ‘Protocol Politicians’

BitMEX bitcoin-only margin requirements appear to be distorting the futures market

Among cryptocurrency exchanges, Seychelles-based BitMEX pioneered now-commonplace bitcoin derivatives like perpetual swaps and 100x leverage. 

But apparently traders are shy about bidding up futures prices on BitMEX, partly due to the exchange’s practice of requiring initial collateral postings in bitcoin.

As reported Thursday by CoinDesk’s Omkar Godbole, the practice exacerbates the rush to margin calls during a price decline and leads to faster liquidations.   

One consequence of all this, according to Godbole, is that BitMEX’s futures basis – the difference between spot prices and where futures are trading – is about 2.7%, about half the level observed on rival exchanges like Deribit, Binance and FTX. So returns will be lower for traders using arbitrage strategies to profit from the spread. 

“There is a residual risk market makers have if they get ‘too long’ on BitMEX,” Patrick Heusser, senior cryptocurrency trader at Zurich-based crypto broker AG, told CoinDesk in a Twitter chat. “Therefore, the general pricing of those futures is slightly lower compared to the multi collateral platforms.”

Bitcoin Watch

Both bitcoin and ether were consolidating in a narrow range, having found a strong support near $10,000 and $320, respectively, over the past few days. 

“Bitcoin fundamentals remain positive as hashrates are at all-time highs,” analysts at Stack, cryptocurrency trackers, and index funds provider, said in their weekly research note. “As such, the cryptocurrency’s technical price floor will shift upwards.”

Meanwhile, ether’s fortunes remain tied to the developments in the decentralized finance space. Ether’s put-call volume ratio jumped to multi-month highs on Wednesday, indicating increased demand for put options or bearish bets. 

“It shows traders want a hedge [via put options] against the activity in DeFi, which has been the primary driver of ether prices,” Vishal Shah, an options trader and founder of Polychain Capital-backed derivatives exchange Alpha5, told CoinDesk.

Read More: Ether Traders May Be Hedging Against DeFi Slowdown

– Omkar Godbole

Token Watch

Tether (USDT), Solana (SOL), Ethereum (ETH): Tether says it has launched on Solana blockchain to help users exchange dollar-linked stablecoin USDT at speeds greater than 50,000 transactions per second.

What’s Hot

How to watch INX’s IPO in real time on the Ethereum blockchain (CoinDesk) 

Kraken exchange returns to Japan two years after exiting market (CoinDesk)

Euro will be overtaken by China’s digital yuan if Europe has no central-bank digital currency by 2025 (dGen)

Mastercard releases “virtual testing environment” to help central banks simulate distribution and use of digital currencies (CoinDesk)

Huobi exchange now offering “savings product” paying annualized yield of 3.5% on bitcoin deposits (CoinDesk)

Argo, publicly traded blockchain firm, takes profit hit as costs rise faster than crypto-mining revenue (CoinDesk)

Avoiding regulation is counterproductive for bitcoin adoption, says a former Visa exec (Forbes)

Analogs The latest on the economy and traditional finance

Hedge fund legend Druckenmiller says inflation could hit 10% due to “the merging of the Fed and the Treasury” (CNBC)

Trump policies added $3.9T to U.S. budget deficits pre-Covid, $2.7T since (Committee for a Responsible Federal Budget)

Money printing “will probably go `more brrr’ even after the election” (CoinShares)

Leftist Mexican President Lopez Obrador proves deficit hawk, aims for budget surplus despite uncertain recovery (Bloomberg)  ​

Second round of $1,200 stimulus checks in U.S. had bipartisan support. Now they could be a longshot​​​​​​​ (CNBC)

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Security token platform tZERO announced Thursday the Financial Industry Regulatory Authority (FINRA) has approved its application to launch a retail broker-dealer subsidiary, tZERO Markets. 

A majority-owned subsidiary of U.S. online retailer Overstock, tZERO also runs a non-custodial crypto exchange app that supports bitcoin, ethereum and ravencoin. 

• In a press statement emailed to CoinDesk, tZERO said the broker-dealer subsidiary will also offer investment banking and placement agent services to token issuers for capital raising activities.
• Because the subsidiary is registered with the SEC and has now been granted FINRA’s blessing, tZERO CEO Saum Noursalehi said the firm expects tZERO Markets to launch its services in the coming months.
• The statement added that depending on regulatory review, the platform’s launch would be web-based and later expanded to include Android and iOS devices.

Read more: tZERO Slashes Jobs, Salaries as It Gears Up for Another Funding Round

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• tZero

With U.S.-China tensions continuing to burn, some investors are feeling the heat. 

Friction between the world’s two largest economies has taken a toll on venture funds investing in non-crypto startups. Investment in the blockchain industry, however, may be less affected. Crypto companies’ unique fundraising processes and decentralized nature provide some protection from geopolitical risks, according to China-focused crypto and blockchain investors. 

The Trump administration recently sanctioned Chinese officials because of Hong Kong’s new security law. Separately, the U.S. warned the global community against using Chinese technology and tried to force Chinese companies to sell parts of their business. Other western countries are beginning to follow suit. China has kicked out major American media outlets and closed the U.S. Consulate in Chengdu. 

Related: Tech Mahindra to Offer Blockchain Solutions on AWS

China-focused venture funds have seen low capital inflow due to investment restrictions on U.S. pension funds, while Chinese companies will have to go through a more rigorous vetting process if they wish to go public on Nasdaq or New York Stock Exchange in the U.S. This tightening comes on top of the COVID-19 pandemic, which has already taken a toll on cross-border investment. 

Six U.S.-dollar funds with investments in China have looked to raise capital this year compared to 21 last year. The State Department has asked U.S. universities and colleges to divest their Chinese holdings due to stricter scrutiny from the Trump administration and potential delisting of all Chinese companies on U.S. exchanges. The warning came on the heels of a ban on Chinese short-video platform Tik Tok and Tencent’s messaging app WeChat.

While it is difficult to obtain comprehensive data on the scope of U.S.-China crypto investment, there have recently been a few notable deals. Jump Trading, a U.S.-based security and cryptocurrency market maker for Robinhood, announced Thursday it would invest in decentralized exchange Serum, which has a large presence in Hong Kong. California-based funds Paradigm and Pantera led a $28 million Series A round in Hong Kong crypto startup Amber Group in February. Meanwhile, Hong Kong-based blockchain investment firm Hashkey participated in crypto lender Blockfi’s $50 million Series C in August. 

Due to more lenient regulations on crypto trading and financial convenience in Hong Kong, some Chinese crypto and blockchain funds and crypto firms are based there rather than in mainland China.  Companies might headquarter themselves in Hong Kong to take advantage of its regulatory regime and status in the financial world, when they are actually from, or subsidiaries of companies in, mainland China.

Decentralization

Related: US Antitrust Chief Says Protecting Blockchain From Competitive Abuses Is Top Priority

The White House recently directed a retirement savings fund to stop investing in Chinese companies, citing threats to national security. But these restrictions don’t necessarily pose a threat to crypto startups.  

“A pension fund might find a hard time in allocating assets but it is a broad phenomenon that those funds do not invest in crypto regardless of the U.S.-China relations,” says Haseeb Qureshi, managing partner at Dragonfly Capital Partners, an Asia-focused crypto venture capital based in San Francisco. 

Typical institutional investors for crypto and blockchain funds are crypto exchanges and the investment firms that don’t receive capital for large pension funds or endowments, Qureshi said. 

Read more: China Aims to Be the World’s Dominant Blockchain Power – With Help From Google, Amazon and Microsoft

Decentralized ownership structure makes crypto projects immune to geopolitical risks, said Sharlyn Wu, chief investment officer at Huobi, one of the largest crypto exchanges by volume in the world. 

“Community-driven projects, especially the decentralized fiance protocols such as YFI, have a tendency to [avoid] venture capital firms,” Wu said. 

Venture funds normally take a stake in a firm and help it grow its business, something not possible with decentralized projects, Wu said.

“However, crypto is about the decentralized network and you can’t really track down a particular group of people in a country,” she said.  

National pride

Western crypto projects often appeal to Chinese investors. 

“Historically, there are relatively more innovative crypto projects from the West in general and these projects would attract investment from the East where they tend to have more liquidity,”  said Omer Ozden, CEO of RockTree Capital, an investment firm with a focus on blockchain technology in Asia. 

“Chinese crypto investors are very enthusiastic and active, reflecting the FOMO (Fear of Missing Out ) phenomenon.” 

But in China, political tensions occasionally bleed into the business sphere. If Chinese investors start favoring homegrown projects, that could spell trouble for U.S. crypto projects.

“The tension in some way increases the viability of the Chinese crypto teams,” Qureshi said. “In part it means there would be more willingness within China to support some of the homegrown Chinese projects.” 

Read more: A WeChat Ban Should Be the Moment for Decentralized Tech. But It’s Not.

There have been a slew of incidents where foreign companies have faced Chinese nationalist wrath because of political events. 

In 2008, Chinese consumers protested French supermarket chain Carrefour when pro-Tibet Independence protestors snatched the torch during the Olympic relay in France. Last October, the National Basketball Association (NBA) took heat from China because of a tweet from Daryl Morey, the general manager of the Houston Rockets, who posted an image that supported protesters in Hong Kong. 

While crypto is not fully shielded from political controversy, it helps that startups are not necessarily associated with one particular country. The crypto community is decentralized and global from the get-go and it is unlikely that it will be affected for geopolitical reasons, Wu said. 

“If your project is genuinely innovative, it will transcend beyond culture and languages,” she said. 

Strategic technology

One of the reasons why the U.S. wants to ban TikTok and WeChat is because they have so much data from American users. Permissionless blockchains, by contrast, aim to avoid the problem of honeypots of personal data. 

“The Committee on Foreign Investment in the United States (CFIUS) has not touched crypto,”  Qureshi said. “On a broader level, the U.S. just doesn’t see crypto or blockchain in particular as a strategic threat and we have pretty much shielded from any of that nonsense.” 

Even if there is a massive amount of data on a decentralized public blockchain, such projects decrease the reliance on one company, such as Facebook or Tik Tok. 

Read more: China’s Digital Currency May Come With Hardware Wallets as Well

“You don’t need to trust anyone and you can just trust the code,” Wu said. “The code is open-source and on-chain. Everyone can check it out.” 

However, there are limitations on this decentralization, even for public blockchains. Some of the platforms will need to store their users’ data through centralized cloud service providers such as Google Cloud, Amazon Web Services and Alibaba Cloud, which are subject to potential government surveillance. A government could also shut down a blockchain-based platform by cutting its Internet services in the country.

Enterprise blockchain

Compared to public decentralized blockchains, enterprise blockchains led by particular entities are more vulnerable to geopolitical tensions. 

Any centralized businesses, including those that develop enterprise blockchain, are subject to local regulatory and legal requirements as much as any other regular tech firms, Wu said. 

Enterprise blockchain, which is also called permissioned or private blockchain, has been widely used for data management such as record tracking, and comes with smart contracts that enable automated financial services transactions. They are typically governed by a small group of companies and only a handful of people have access to the data stored on-chain. 

See also: The Latest on the Global Economy’s Most Contentious Relationship

Various tech conglomerates have developed their own enterprise blockchains, including IBM-backed Hyperledger, Ablibaba’s Ant Chain and Baidu’s XuperChain. The Chinese government is a major supporter of permissioned blockchain technology, and the Beijing municipal government recently launched a blockchain-based platform. Supported by Huawei Cloud, it will be able to manage data ranging from medical records to property registration. 

Although Chinese enterprise blockchain technology has not yet met with any political resistance for U.S. legislators, experts warned those projects will face higher policy risks if they achieve mass adoption and gather more user data in the future. 

For example, the state-sanctioned blockchain infrastructure project Blockchain-Based Service Network (BSN), uses American cloud services providers such as Amazon Web Services and Google Cloud to store data for the global version of its network. It smoothly rolled out operation in August.

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