CoinDesk Crypto

Bitcoin’s options market foresees little price turbulence in the short-term, even as central bank watchers expect fireworks during a speech by the chairman of the Federal Reserve on Thursday morning.

• Bitcoin’s implied volatility on one-month options, a gauge of the market’s expectations for price gyrations over the four week period, fell to 52% early Thursday – the lowest level since July 25, according to data source Skew. 
• Short-term price expectations have declined sharply from 70% to 52% over the past two weeks.
• Over three months, the gauge has pulled back from 80% to 68%, while the six-month line has declined from 80% to 72%.

• At 9 a.m. Eastern today, the Fed Reserve’s Jerome Powell is expected to announce new measures from the central bank at his annual keynote at the Jackson Hole symposium.
• Investors usually buy both calls (bullish bets) and puts (bearish bets) ahead of such key events, pushing implied volatility higher.
• Analysts expect Powell to signal tolerance for high inflation – a move that could weaken the U.S. dollar and propel bitcoin higher.
• However, with strong expectations already built in, the scope for disappointment is high, and the dollar may surge if Powell’s comments fall short of expectations.
• The event, therefore, has potential to trigger big moves in either direction.
• The lull in expectations for bitcoin price volatility may reflect that traders are playing a wait-and-see game until Powell’s planned direction becomes clear.
• That said, any potential volatility in the forex markets could feed into cryptocurrencies, as the inverse correlation between bitcoin and U.S. dollar has strengthened over the past few weeks.

• The 60-day inverse correlation is now strongest in at least 16 months.
• Further, the implied volatility terms structure remains steep, meaning the six-month implied volatility is still hovering above the three-month, which in turn is greater than the one-month metric.
• That “indicates that uncertainty is high,” Denis Vinokourov, head of research at the London-based institutional brokerage BeQuant, told CoinDesk in a Telegram chat.
• At press time, bitcoin is trading near $11,380, representing a 0.8% decline on the day.

Also read: Fed Chair Powell’s Jackson Hole Speech Could Hint at US Dollar’s Future

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Related: LIVE: CoinDesk Covers Fed Chair Powell’s Jackson Hole Speech

LIVE: Keoun and CoinDesk regulatory reporter Nikhilesh De are covering Powell’s speech on CoinDesk.com and Twitter. Follow our live coverage here.

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The Libra Association has hired Stevan Bunnel, a veteran of the U.S. Department of Homeland Security, as its general counsel just three months after announcing his predecessor.

• According to a Thursday report by Bloomberg Law, Bunnel will replace Libra’s first-ever general counsel, Robert Werner, a former FinCEN staffer who was hired as recently as May.
• Werner said Bunnel is “an outstanding lawyer and a great guy.”
• Bunnel brings considerable experience to the role having spent time at Homeland Security as general counsel, and before that holding the position of managing partner of the Washington, DC, office of O’Melveny & Myers LLP, a large international law firm.
• Earlier in his career, Bunnel spent several years at the Washington, DC, U.S. Attorney’s Office, per his LinkedIn profile.
• The general counsel role meant Werner would have had to give up his seat on the board of directors at Deutsche Bank Trust Co., a position he told Bloomberg was unwilling to relinquish.
• The Libra Association, comprised of some 26 members including Facebook, was created to develop a global digital currency payments network.
• The association has come under fire on multiple occasions from regulators and lawmakers over concerns the project poses a threat to central bank policies and fiscal sovereignty.
• In recent months, Libra has been building a stronger legal team to help smooth its path to launch.

See also: Libra Hasn’t Abandoned Multi-Currency Stablecoin: Policy Director

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The New Zealand stock exchange has halted trading for the third day in a row as a result of criminal cyberattacks.

• According to a report by Bloomberg on Thursday, the NZX exchange has suffered connectivity issues leading to a series of outages that were the result of targeted disruption by bad actors from outside the country.
• The criminals are demanding bitcoin in order to cease the distributed denial-of-service (DDoS) attacks, which flood the bandwidth of a particular system with traffic rendering it slow or unusable.
• The exchange suffered outages during the last hour of trading on Tuesday and again for over three hours on Wednesday.
• Today’s outage has yet to be resolved, according to Bloomberg.
• According to another report by ZDNet, the attacks may be directed by a criminal cyber gang using monikers like Amada Collective and Fancy Bear that belong to more famous hacker groups.
• Specifically, the attackers have been targeting the exchange’s hosting service Spark, demonstrating a level of sophistication by regularly changing the protocols involved.
• Over recent weeks, the group has tried to extort bitcoin from other well-known financial services including PayPal, MoneyGram, YesBank India, Braintree, and Venmo.

See also: Twitter Hack Used Bitcoin to Cash In: Here’s Why

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The Securities and Exchange Commission (SEC) has given the green light for the New York Stock Exchange (NYSE) to allow some companies to raise capital without the expense of an IPO.

• In a Wednesday order, the SEC approved the exchange to amend Chapter One of the Listed Company Manual to allow firms to hold direct listings.
• The move means companies can now launch a direct listing on the NYSE as an alternate to the initial public offering (IPO), generally preferred by the SEC.
• The direct benefit means it would reduce costs associated with soliciting a bank to underwrite the transaction of an IPO.
• Previously, companies that have sold common equity securities in a private placement were allowed to list shares on the NYSE “solely” to allow shareholders to trade the stock.
• The rule change widens the scope to allow companies to list shares “in addition to, or instead of” facilitating shareholder sales.
• Firms will be allowed the new listing on a case-by-case basis and must meet certain thresholds, including being likely to sell $100 million in shares on the first day of trading on the NYSE.
• The so-called Primary Direct Floor Listing will also allow companies to avoid certain restrictions associated with IPOs, namely lockup periods that prevent insider trading.
• The American Securities Association (ASA), a brokerage group, said direct listings without protections against insider trading would allow for nefarious actors to cash out at “inflated valuations.”
• That would leave “Mr and Mrs. 401(k) holding the bag,” the ASA wrote in a March letter addressed to the SEC as cited in the Wall Street Journal.
• However, in the Wednesday order, the SEC said the NYSE’s direct listing plans already had sufficient investor protections in place.
• The changes come at a time when U.S. crypto exchange Coinbase is said to be preparing to list on the U.S. stock market sometime in early 2021 with preference given to a direct listing.
• On Wednesday, the SEC also announced changes to the rules for accredited investors, slightly expanding the pool of Americans who can invest in private securities.

See also: Crypto and Fintech Investor Ribbit Capital Files to Raise $350M for ‘Blank Check’ IPO

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UPDATE (09:35 UTC, Aug. 27, 2020): Deribit has tweeted that the issue is resolved and trading is once again live.

The most popular cryptocurrency options exchange, Deribit, is suffering a severe service outage.

• According to company tweets early on Thursday, the trading platform is suffering “hardware issues” and a technician has been called to reboot its servers and (hopefully) bring services back to normal functionality.
• “We are not hacked and your funds are safe,” an initial tweet stated.
• Deribit went on to warn that it may not have its systems back online in time for today’s daily options expiry.
• In that case, the firm will “manually adjust the options expiry to reflect the actual market at the time of expiry.”
• The value used for the adjustment would be drawn from Deribit’s index as listed on test.deribit.com.
• However, the outage may knock confidence in the exchange with the news that Deribit doesn’t seem to have server redundancy to avoid such severe ramifications from technical issues.
• Similar issues have affected top U.S. spot exchange Coinbase in the past, leading it to eventually pledge to do more in terms of redundancy provision.
• Deribit may, in fact, have been lucky the outage didn’t occur Friday, when over $700 million-worth of monthly contracts are set to expire, most of them on Deribit.
• Today’s daily bitcoin option expiry is worth $22.8 million, alongside $6.5 million in ether options.
• Deribit is by far the most popular options exchange in the crypto space in terms of trading volumes:

Also read: Fidelity’s Chief Strategist Starts Bitcoin Index Fund

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Concordium, an ambitious project whose founders have close links to companies including Volvo, IKEA, Saxo Bank and Nasdaq, is looking to shake up the seemingly glacial world of enterprise blockchain. 

The most striking thing about Concordium, which launches its third testnet next month, is the way it pushes what was once anathema to big corporates: public and permissionless blockchains.

Businesses, wary of tipping their hands and giving away any competitive advantage, have traditionally preferred the idea of private and permissioned blockchains. But many advocates of blockchain tech believe only open systems hold true transformational promise. The oft-cited analogy centers on the relevance of internet versus intranet.  

Related: ‘Boring Is the New Exciting’: How Baseline Protocol Connected With 600 Corporates

Read more: ‘Boring Is the New Exciting’: How Baseline Protocol Connected With 600 Corporates

Toeing the line between the privacy requirements of regulated businesses and full-broadcast blockchains like those of Bitcoin and Ethereum has led some very smart people to opt for an attenuated architecture when it comes to distributed ledgers. 

However, Concordium is confident it has found a third way, keeping sensitive data private using a clever identity and zero-knowledge-proof (ZKP) system, providing firms with a safe, flexible option to deploy open blockchains.

The momentum around projects like Baseline Protocol, which now has some 600 big firms using it, is a solid indicator ZKP tech is ready for prime time.

‘Something totally new’

Related: ConsenSys Acquires JPMorgan’s Quorum Blockchain

According to Concordium CEO Lone Fønss Schrøder, sometimes you need a permission-based ledger; but in order to realize new business models, it has to come in combination with baked-in permissionless possibilities. 

“I think that’s really what large corporations are looking for,” said Fønss Schrøder. “If you look at Hyperledger, for example, or R3, I don’t think it is blockchain in the sense of really providing something new. It’s not decentralized. Companies are seeing it as just another way to do their mainframe applications. But when you talk about permissionless blockchain, it’s something totally new.”

Blockchain today simply doesn’t meet the needs of corporations, says Fønss Schrøder, and a lack of permissionless flexibility has led to no uptick in business adoption. 

Concordium’s chief marketing manager, Beni Issembert, went further: Businesses underwhelmed by today’s enterprise blockchain offerings are squarely in Concordium sights.

“Businesses that are open-minded feel a lot of frustration and desolation when it comes to using Hyperledger and R3 Corda. And we are talking to those disappointed businesses,” Issembert said.

Big-name partners

It would be easy to write Concordium off as some kind of naive newcomer – both R3 and Hyperledger declined to comment on the Concordium white paper. 

But the project, which has its roots in Denmark, features an impressive cast of players from business and academia. On the science side, Concordium’s research center at Denmark’s Aarhus University is run by widely cited cryptographer Ivan Damgard. Last September, Torben Pryds Pedersen, creator of the Pedersen Commitment cryptographic primitive, was appointed as Concordium’s CTO.

Read more: Staying Alive: Why the World of Enterprise Blockchain Has Turned to Collaborations

In terms of corporate clout, Fønss Schrøder is a boardroom director at IKEA, vice chairman of Volvo and spent 22 years at A.P. Moller Maersk. Concordium’s founder, Lars Seier Christensen, founded Saxo Bank in 1992, while the blockchain’s advisers include former Danish Prime Minister Anders Fogh Rasmussen, and heavy hitters from Nasdaq, Mastercard and Skype.

It’s one thing to announce a paradigm shift in the way businesses intend to use blockchain technology, but another to show hard evidence of this new permissionless demand. 

“We are already in contact with those people [Volvo and IKEA] and looking at ways to fulfill what they would like to do. But we are not only targeting 20 or 40 businesses,” said Issembert. “We are focused on the next generation of commerce, the new unicorns; firms that you don’t have to convince the best approach is an open system.”

Open use cases

It should be pointed out that Volvo has blazed a trail when it comes to tracking the minerals used in electric car batteries with the help of Hyperledger Fabric. IKEA has also done some interesting blockchain experiments with the likes of Tradeshift using the Maker protocol. 

Neither Volvo nor IKEA would confirm to CoinDesk whether they were testing Concordium at this time.

Read more: IKEA in ‘World First’ Transaction Using Smart Contracts and Licensed E-Money

If large corporations have been mostly happy with proofs-of-concept using closed enterprise blockchains, what are the new use cases that open systems like Concordium can offer? 

Fønss Schrøder said a major opportunity exists in rethinking the way procurement and supply chains work, for example. (In terms of new entrants to the enterprise blockchain space, there have also been some interesting moves from the EOS ecosystem, particularly in Latin America.)

“It could be smart contracts, which actually will function as marketplaces for you and your whole procurement sector,” said Fønss Schrøder. “I think about what Maersk has been doing, but the disadvantage for Maersk is that this should never have been built on a permission-based blockchain; it should have been permissionless. But that’s the kind of logistical use case I’m sure we will be able to support.”

Volvo board member Fønss Schrøder also sees plenty of uses for open blockchains in the car industry, across secondary markets, for instance, and the service agreements that come with that.

“Nearly every car sold by Volvo has some kind of lease arrangement or car-care, and blockchain is well suited to support this on the insurance side and on the service side,” said Fønss Schrøder.

Public, but private

As far as the ZKP secret sauce, Issembert called this the “backbone of the network,” but could not disclose details.

“For the ZKP design approach, we are going to come to the market with our own solution. It’s not something that has been seen yet,” he said.

Read more: WATCH: ‘Big Four’ Exec Says Privacy Is Key to Enterprise Blockchain Adoption

Next month sees Concordium’s third testnet come into being, with a view to going live in January 2021. 

“We will have the smart contract layer ready and then we will see which corporations will build on it,” said Fønss Schrøder. “It will be very interesting. I don’t think we will disappoint you.”

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Messaging giant LINE has launched a wallet for users to manage digital assets and a blockchain platform where developers can issue their own tokens, tokenize digital assets, and run decentralized applications (dapps).

• LINE’s development platform aims to allow companies to easily introduce blockchain technology, CoinDesk Japan reported.
• LVC Corporation, operator of the company’s crypto and blockchain businesses, and LINE TECH PLUS PTE unveiled the platform, LINE Blockchain Developers and BITMAX Wallet on Wednesday. The wallet services are now only available in Japan, where LINE is particularly well-known.
• The company is developing the proprietary LINE Blockchain and issued its own token LINK (LN) for trading against several major crypto assets such as bitcoin and ether in 2018.
• LINE also started offering trading services via its crypto exchange Bitbox. It was approved for a crypto business license in September 2019. 
• The company established the LINE Blockchain Lab in April 2018, which has been tasked to build the LINE Token Economy.
• LINE, with more than 84 million users in its messaging app, aims to leverage its existing network to jumpstart the development of its token economies and accelerate adoptions of many dapps built on its proprietary blockchain platform.
• The company is one of a handful of messaging apps that have tried to develop blockchain technology and issue their own tokens, but it stands out for the progress it has made.
• Canadian messaging company Kik and Russia-originated Telegram have met with lawsuits from the U.S. Securities and Exchange Commission for their controversial fundraising processes called Initial Coin Offering (ICO), while American messaging giant Facebook’s stablecoin project Calibra is stalled and facing major challenges from the U.S legislators and financial authorities. 

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When Hong Kong regulators gave crypto firm OSL a nod of approval last week, it was the icing on the cake for the HKEX-listed digital asset trading platform. 

Hong Kong’s Securities and Futures Commission (SFC) granted BC Group crypto subsidiary OSL an “approval-in-principle” for its license application for Type 1 (dealing in securities) and Type 7 (automated trading service or ATS), as it pertains to crypto and virtual assets.

The bigger picture is that Asian crypto hubs like Hong Kong, Singapore and Japan have a clearer regulatory stance going forward and are progressing faster than the U.S. and Europe. Perhaps this should be expected, given that Asia remains the global leader in terms of crypto trading volumes.

Related: Hong Kong Regulator Gives Crypto Exchange OSL Tentative Licensure Approval

“I think regulatory progress has been so much more significant than in North America,” OSL CEO Wayne Trench said in an interview. “You’ve got regulators who’ve been front-foot trying to embrace this movement and embrace the technology. The West is perhaps slightly less developed with more obscurity or uncertainty, which just really makes it difficult right for the traditional institutions to engage.”

Read more: Hong Kong Regulator Gives Crypto Exchange OSL Tentative Licensure Approval

This is not to say Hong Kong is delivering light-touch regulation when it comes to virtual assets; quite the opposite, said BC Group CEO Hugh Madden. 

“The SFC flies very carefully and is heavily focused on consumer protection,” Madden said. “If you look at the details of the SFC’s licensing framework, it’s quite specific. They prescribed mandatory insurance to protect consumers with specific percentages for hot and cold storage. When you add in the levels of controls, capital and scale of your organization, it’s really quite a tough hurdle.”

Related: Is Bitcoin Mining Legal in India? Miners Still Don’t Know

The SFC did not respond to a request for comment by press time.

OSL, which states it is the first crypto company to be granted provisional approval by the SFC, has acquired insurance cover for both hot (connected to the internet) and cold (fully offline) storage of digital assets but declined to go into details of the size of cover or markets providing it. OSL is also set apart from other crypto plays in that it’s audited by Big Four accounting firm PwC. 

Read more: Crypto.com Lands Record $360M Insurance Cover for Offline Bitcoin Vaults

In terms of timelines, Madden said if all the SFC’s supervisory requirements are met, OSL should have its full license by the end of this year.

Asian autonomy

The SFC announced its regulatory framework for virtual asset trading platforms back in November 2019, emphasizing the regulator would only grant licenses to platform operators meeting standards comparable to licensed securities brokers and automated trading venues.

“With the license in principle given to OSL now, it would appear the SFC is keen to promote the licensing framework that was clarified last November,” said Malcolm Wright of industry group Global Digital Finance.

Read more: PwC Report Shows Major Growth in Crypto M&A in Asia and Europe

Wright, a compliance expert based in Hong Kong, said Singapore, Japan and Hong Kong have a natural advantage in that they are able to develop their frameworks with relative autonomy. 

“The U.S. and Europe are more complex environments,” he said via email. “For Europe, first there needs to be European agreement (e.g., 5th Anti-Money Laundering Directive) and then each country has to implement it into law – a process that can take several years to complete and can still lead to unevenness in regulatory approach.”

‘Travel Rule’ landscape

OSL and BC Group have also earned their regulatory chops thanks to their close involvement with the Travel Rule Protocol (TRP), a Financial Action Task Force (FATF) “Travel Rule” solution for crypto led by Dutch lender ING and Standard Chartered Bank, and including Fidelity Digital assets and BitGo.

Read more: In Banking First, ING Develops FATF-Friendly Protocol for Tracking Crypto Transfers

Madden pointed out that OSL has license applications underway in both Hong Kong and Singapore. He has personally followed the progress of FATF rules for crypto closely in Asia and internationally, and has had the chance to engage with multiple regulators.

Madden described the Travel Rule solution jurisdictional map as “an interesting landscape,” with virtual asset service providers (VASPs) in the large economies tending to be more domestically focused, while very trade-oriented financial centers are working in a more international fashion.

“Fortunately, we’re all well-known to each other, and all the groups are brilliant at communications in order to try and stay aligned,” Madden said.

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Nigerian programmer Adebiyi David Adedoyin hears knocking at his apartment door. He’s just woken up and headed to the bathroom. He decides to take his time. He’ll answer in a minute.

But the knocking grows louder – and more urgent. 

Inching open the bathroom door, Adedoyin sees someone clawing open his apartment window. 

Related: Fed Chair Powell’s Jackson Hole Speech Could Hint at US Dollar’s Future

“Someone’s there,” a voice says.

It’s probably the police trying to break in, he realizes, from all the stories he’s heard.

Adedoyin is sure he hasn’t done anything wrong. But with the Nigerian police, that doesn’t matter. He still might need to brace for trouble. 

As he thinks through what to do next, Adedoyin is thankful a chunk of his money is stored in bitcoin. His crypto wallet is in a hiding spot the officers probably won’t think to check. That means they’re less likely to steal it.

Police corruption

Related: Market Wrap: Bitcoin Braces for $700M in Options to Expire; Record $7B Value Locked in DeFi

While there are many principled police officers in Nigeria who help tackle crimes, police corruption is pervasive. Many Nigerian police are known for extorting and even sometimes torturing citizens rather than helping them solve legal quandaries. 

“Right there in the bathroom, where I was in my boxers with just my phone, AirPods and pack of cigarettes, I could hear them shouting for me to come open the door,” Adedoyin told CoinDesk.

This is a well-documented phenomenon in Nigeria. Over the past several years, an online social media movement has emerged against the police. On Twitter, people use the hashtag #EndSARS to publicize the poor treatment they’ve received from police. SARS stands for Special Anti-Robbery Squad, which is a particularly brutal and mistrusted wing of the Nigerian police force.

Human rights research organization Human Rights Watch released a 102-page report outlining the abuses in painful detail in 2010. 

“Human Rights Watch’s research revealed that people refusing to pay bribes are routinely subjected to arbitrary arrest, unlawful detention and threats until they or their family members negotiate payment for their release. Extortion-related confrontations between the police and motorists often escalate into more serious abuses. The evidence suggests that police officers have on numerous occasions severely beaten, sexually assaulted, or shot to death ordinary citizens who failed to pay the bribes demanded,” the report reads.

Tricks and strategies

Adedoyin notes that Nigerians have to develop their own tricks to avoid police extortion, especially the younger Nigerians who are the main targets. Some people walk along different routes to avoid walking near the police.

 “Now it’s up to each person to prevent oneself from entering such situations,” he said.

The practice is common enough that Adedoyin has been extorted by police officers more than once, and his friends have, too.

Corrupt police officers take their detainee’s phone. They scan through it looking for SMS or email messages signalling how much money the detainee has in the bank. 

If the police officer finds the detainee doesn’t have any money, they’re less likely to waste their time.

Locked in the bathroom, Adedoyin rapidly scrolls through his most recent messages, deleting any bank statements or emails showing how much money he has.

The bathroom door lock breaks. 

Adedoyin is confronted by four police officers, all carrying guns. One slaps Adedoyin and asks him why he didn’t come open the door. As Adedoyin expected, another officer snatches his phone and scans through for any grain of evidence that Adedoyin has money.

Adedoyin didn’t have time to delete everything. The officer finds some evidence of how much money he makes. They finally let him go once he pays.

Where using bitcoin comes in

It was a bad experience. But Adedoyin is happy that his bitcoin trick worked – most of his money is still safe. 

“The money they collected to let me go in that case would have been a lot more if I had more money in my account. But I had most of my money in bitcoin,” Adedoyin said.

Why does using bitcoin help in this situation? Adedoyin’s ploy is to pretend that he doesn’t have much money to extort. His solution is to store his money in a bitcoin wallet instead of in a bricks-and-mortar bank. Since bitcoin’s less common, it’s less likely the police officers find it.

Put another way, he’s not putting his money into bitcoin as a safeguard because of its decentralization properties. Rather, he just thinks police officers are far less likely to look for a crypto balance than a fiat balance to see if he’s ripe for extortion. 

“[The officers] don’t think to check [bitcoin] wallet apps, because most of them don’t even know what bitcoin is and even think bitcoin is a scam,” Adedoyin said.

The second reason he has bitcoin is he hopes the price will keep rising. Like many other bitcoiners in the region, he sees it as an investment that might pay off in the future. 

But for now, he keeps most of his money in bitcoin as security against the next time the police come banging on his door.

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A speech by Federal Reserve Chair Jerome Powell scheduled for Thursday offers a reminder of just how dramatically once-slow-moving monetary forces have accelerated due to the devastating economic toll of the coronavirus pandemic. 

This time last year, President Donald Trump was vehemently criticizing Powell on Twitter for setting interest rates too high, as U.S. economic growth slowed and the national debt swelled past $22 trillion.

This time last year, then-Bank of England Governor Mark Carney delivered a speech at the Fed’s annual Jackson Hole Economic Symposium in Wyoming warning the U.S. dollar’s status as the de facto global currency contributes to an unsustainable international economic and monetary regime. He argued that world leaders should create a “synthetic hegemonic currency,” potentially provided “through a network of central bank digital currencies.” 

Related: Unconfiscatable? Using Bitcoin to Resist Police Extortion in Nigeria

Fast forward to now, and the Jackson Hole conference has been forced to go virtual because of the coronavirus. Trump’s economic stewardship, including a U.S. stock market that many investors now say is propped up by the Fed’s $3 trillion of freshly printed money, has become a core issue in the 2020 presidential election. The national debt now stands at $26.5 trillion. Digital currencies are now being studied and pursued by central banks in China, the U.S. and just about everywhere else. Goldman Sachs recently warned the dollar risked losing its dominant reserve status. 

“The pandemic has sped up key structural trends and triggered substantial market swings,” strategists for the $7 trillion money manager BlackRock wrote this week. “The policy revolution was needed to cushion the devastating and deflationary impact of the virus shock. In the medium term, however, the blurring of monetary and fiscal policy could bring about upside inflation risks.”

Read more: The Federal Reserve Is Experimenting With a Digital Dollar

As the spread of the coronavirus earlier this year triggered lockdowns and quarantines, the global economy this year entered its deepest recession since the early 20th century. 

Related: Market Wrap: Bitcoin Braces for $700M in Options to Expire; Record $7B Value Locked in DeFi

When markets from stocks to bitcoin swooned in March, the Fed slashed interest rates close to zero and has since announced plans to buy U.S. Treasury bonds in essentially unlimited amounts while providing emergency liquidity for money markets, Wall Street dealers and corporations. 

“The road ahead is highly uncertain,” Fed Governor Michelle Bowman said Thursday in a speech in Kansas.  

‘No easy way out’ for Powell

Many investors are betting on bitcoin as a hedge against the potential debasement of the U.S. dollar, but Fed officials say deflationary forces might be stronger because of an expected drop off in demand from consumers and households.

Analysts for Bank of America, the second-biggest U.S. bank, wrote earlier this week in a report that bond market traders expect the Fed to adopt a “major new policy framework aimed at better achieving its 2% target” for annual inflation. As of the last reading, the central bank’s preferred measure of consumer price increases registered just 0.9%, so the baseline expectation is the Fed would let inflation rise well above 2% so that the average over a long period of time gets closer to the target. 

Read more: Bitcoin Risks Deeper Drop if Dollar Rebounds

“Let us be optimistic and say it takes three years to create some inflation,” Matt Blom, head of sales and trading at the digital-asset firm Diginex, wrote Wednesday in an email. “We would need to drive it above 3.5% and maintain it there for years before we are able to use an average calculation.” 

It’s unclear what Fed scenario is already priced into the market, but Bank of America’s Athanasios Vamvakidis, a foreign-exchange analyst, wrote that there is “no easy way out” for Powell and his colleagues. 

“Without inflation eventually acting as a budget constraint, we see risks for recurring and worsening bubbles, with further divergence between Wall Street and Main Street,” Vamvakidis wrote. 

What Powell’s speech could say about the dollar’s future

Crypto traders will focus in the short term on what the Fed’s speech might mean for bitcoin prices, which have surged almost 60% in 2020, far exceeding this year’s 7.7% year-to-date gain in the Standard & Poor’s 500 Index of U.S. stocks. 

But the Fed’s actions could also have implications for ether, the native token of the Ethereum blockchain, where entrepreneurs are developing alternative currencies and semi-autonomous lending and trading networks that might one day replace the current financial system. There’s also a fast-growing business in dollar-linked “stablecoins,” with the amount doubling this year to $13 billion.

Read more: Fed Reserve Analysts Say Common Digital Currency Distinction ‘Problematic’

“So much has changed,” said Joe DiPasquale, CEO of the cryptocurrency-focused hedge fund BitBull Capital. “There is this danger of the U.S. [dollar] in the future no longer being the world’s reserve currency. We are in a much worse position than we were in a year ago.”

Mati Greenspan, founder of the cryptocurrency and foreign-exchange analysis firm Quantum Economics, wrote this week that Powell’s return to Jackson Hole comes at a time when “people are just starting to ask questions about the intrinsic value of money.” 

“U.S. authorities have just taken on an inordinate amount of debt, more than they could possibly ever hope to pay back,” Greenspan wrote. “So the only viable option is to decrease the value of that debt by way of monetary debasement. It’s despicable and dangerous, but the only other option is austerity, which is too unpopular for any public servant to mention at this time.”

Related Stories

• Bitcoin Drop Squeezes Out Weak Derivatives Positions – And That May Be a Good Thing
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The bitcoin market bottomed out around $11,100 before bouncing back; DeFi continues an upward trend, garnering interest from traders and perhaps creating new ones.

• Bitcoin (BTC) trading around $11,467 as of 20:00 UTC (4 p.m. ET). Gaining 1.2% over the previous 24 hours.
• Bitcoin’s 24-hour range: $11,102-$11,593.
• BTC above its 10-day moving average but below the 50-day, a sideways-turning-bullish signal for market technicians.

Bitcoin’s price was able to hold above $11,100 Wednesday, going as low as $11,102 before jumping as high as $11,593. 

Read More: Bitcoin Drop Squeezes Out Weak Derivatives Positions

Related: Unconfiscatable? Using Bitcoin to Resist Police Extortion in Nigeria

Katie Stockton, analyst at Fairlead Strategies, sees $10,000 as a lower bound in trading because the world’s oldest cryptocurrency lacks market momentum. “The pullback in bitcoin appears healthy,” Stockton noted. “That said, there is room for further near-term downside with support in the $10,000-$10,055 area, where there was once resistance, and room to short-term oversold territory.” 

Jean Baptiste Pavageau, a partner at quantitative trading firm ExoAlpha, says bitcoin continues to be affected by gains in alternative cryptocurrencies, or altcoins. Indeed, one way to measure this is looking at bitcoin’s dominance, which hit a 2020 low of 60.26% in August. 

”The flattishness of the bitcoin price since the beginning of August allowed the altcoin market cap to grow quickly with an inflow from bitcoin traders toward altcoins,” said Pavageau.  

However, two key events looming over the balance of this week might increase bitcoin market action. One is Thursday’s speech from Federal Reserve Chair Jerome Powell. “The key thing to watch from Powell’s speech tomorrow is the possible shift of the inflation target from a unique figure, like 2%, to a range such as 1.75%-2.25%,” said Chris Thomas, head of digital assets for Swissquote Bank. “This would create a dovish feel to the market and we’d likely see some dollar weakness.”

Related: Fed Chair Powell’s Jackson Hole Speech Could Hint at US Dollar’s Future

Another event is the expiration of 65,000 BTC options, over $700 million at current market values, on Friday. The vast majority of these options are on crypto derivatives platform Deribit. 

“We may see some volatility as a few traders try to push the futures market towards the $11,000 or $12,000 strike,” said Swissquote’s Thomas, adding, “$11,000 would be a buying opportunity and $12,000 we’d likely see further selling.” 

Read More: Fidelity’s Chief Strategist Starts Bitcoin Index Fund

Value locked in DeFi at $7B

Ether (ETH), the second largest cryptocurrency by market capitalization, was up Wednesday, trading around $386 and climbing 1.4% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: BitGo Weighs Building a Sidechain for WBTC as Ethereum Fees Climb

The total value locked in decentralized finance, or DeFi, has surpassed $7 billion in value, according to aggregator DeFi Pulse. Over 4.8 million ETH and 49,248 BTC is currently “staked” in various DeFi services, gaining a percentage profit or “yield” in return. 

Vishal Shah, founder of crypto derivatives platform Alpha5, says DeFi’s opportunities are captivating the interest of traders, and perhaps creating some brand-new ones. “Derivatives traders naturally look for complex risk to exploit, and, by comparison to DeFi, typical derivatives instruments are quieter,” Shah said. “I think the nuanced specifics of DeFi are probably even giving rise to a new breed of derivative traders.” 

Read More: What to Make of the SEC’s New Accredited Investor Rules

Other markets

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

• qtum (QTUM) + 10.4%
• chainlink (LINK) + 7.4%
• 0x (ZRX) + 5%

Read More: Binance’s New DeFi Futures Let Crypto Traders Bet on Decentralization

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

• bitcoin gold (BTG) – 1%

Read More: FTX Exchange’s $150M Deal for Mobile-First Blockfolio Is Retail Trading Play

Equities:

• Asia’s Nikkei 225 ended the day flat, in the red 0.03%, as a Japan-U.K. trade deal is expected to be finalized by Friday.
• Europe’s FTSE 100 closed flat, in the green 0.14%, as a stronger pound hurt internationally exposed company stocks, dragging down the index.
• The United States’ S&P 500 gained 1%, led by tech stocks as Salesforce jumped 26% on expectations of a stellar earnings announcement.

Read More: Crypto and Fintech Investor Ribbit Capital Files to Raise $350M for IPO

Commodities:

• Oil is flat, down 0.03%. Price per barrel of West Texas Intermediate crude: $43.35.
• Gold was in the green 1.1% and at $1,952 as of press time.

Read More: Marathon to Buy Fastblock Mining for About $22M in Stock

Treasurys:

• U.S. Treasury bonds were mixed Wednesday. Yields, which move in the opposite direction as price, were down most on the two-year, in the red 3.8%.

Read More: Democrats Ask Trump Admin. For Details on Terrorist Crypto Seizures

Related Stories

• ‘It’s Part and Parcel of Crypto’: How Memes Drive Narrative and Value
• Bitcoin Drop Squeezes Out Weak Derivatives Positions – And That May Be a Good Thing

Mathew J. D’Souza, crypto entrepreneur and CEO of Blockware Solutions, died on Aug. 21 after a seven-year fight with leukemia. He was 29.

D’Souza’s firm, a major U.S.-based mining rig distributor, announced his death and said a memorial service would be held in Park Ridge, Ill., where the company is based, on Wednesday. 

Despite a short life, he was greatly accomplished. He graduated with a Bachelor of Science in Accountancy (with Honors) in 2012 and a Master of Accounting Science in 2013 from the University of Illinois at Urbana-Champaign. Before entering the crypto world, D’Souza worked with accounting firm KPMG. 

Related: Arctos Inks $1M Sale and Leaseback Deal With Bitcoin Miner Blockware

In crypto, however, he quickly made his mark. In 2017 he co-founded two firms, Blockchain Opportunity Fund, LLC, a multi-million dollar cryptocurrency hedge fund, and Blockware Solutions, LLC, a leading service provider for the bitcoin mining Industry. While CEO, Blockware Solutions became one of the largest distributors of mining rigs to the U.S. market, according to the company.  

In 2019 he co-founded the bitcoin mining fund Blockware Mining, LLC and served as the company’s CEO.

In addition he was a keen observer and advocate of the blockchain and crypto space and a frequent source of insight for reporters at CoinDesk. He was a featured speaker during the virtual Consensus: Distributed conference in May.  

D’Souza is survived by his parents and brothers. Blockware Solutions said those wishing to pay tribute to his memory could make donations to the Evans Scholars Foundation. 

Related: Canaan’s Post-IPO Stock Plunge Reveals Sales Slump, Price War With Bitmain

A Celebration of Life will be held on Friday, Aug. 28, from 3 p.m. to 8 p.m. local time at Cooney Funeral Home located at 625 Busse Highway in Park Ridge, Ill.  The Memorial Service will be held the next day at 10 a.m. at Mary, Seat of Wisdom Parish, 920 W. Granville, Park Ridge.

Two U.S. tech firms are building NASA a blockchain-based communications solution they believe has potential for the space agency’s quadcopter fleet.

• Orbit Logic and the Fraunhofer USA Center for Experimental Software Engineering won $124,800 in NASA funding Tuesday to build “Space Communication Reconstruction and Mapping with Blockchain Ledgering,” or SCRAMBL for short.
• While the proposed SCRAMBL is far from the launchpad, the system as described in a brief seeks to use blockchain to propagate data between networking satellites, increasing their communication efficacy, coordination and “overall awareness.”
• “Lightweight and tailored” algorithms will shore up communication breakdowns, according to the SCRAMBL project brief. If one node cuts out, the rest will quickly and dynamically adapt.
• Such flexibility could be of particular use for NASA’s budding army of tiny drones moving in tandem, the SCRAMBL project proposal said. NASA is currently spending billions on an octocopter mission to Saturn.
• As pointed out by the two firms, quadcopter swarms need to stay nimble in inhospitable environments, where communication is spotty but operational awareness remains paramount. They told NASA that blockchain could be just the ticket.
• NASA did not return CoinDesk queries, and Orbit Logic did not pick up calls.

Related Stories

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• Darknet’s Largest Marketplace Still Offline; Fears of Exit Scam Rise
• South Korean Crypto Exchange Coinbit Seized Over Allegations of Massive Wash Trading

Blockchain firm Coda Protocol announced the launching of its node operator mentorship program on Wednesday. 

• In a press statement emailed to CoinDesk, the firm said that in order to train people to run nodes it would pair them with “technical ambassadors” from its team, and this program would also be a gateway for applicants to seek a grant of Coda’s tokens to help develop the network.  
  
• We are proud that 30% of our community comes to us having never run a node before,” said Evan Shapiro, CEO of O(1)Labs, the firm developing Coda Protocol, in the statement. “We made this program to really make it easy for people to get involved with what we’re building,” he added. 
  
• According to Shapiro, Coda is also on track for its expected mainnent launch in Q4. “It’s just a few more testnets and we’ll be there,” he said. 

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• One Small Step for Bitcoin – SpaceChain Secured Transfer From International Space Station
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• China Aims to Be the World’s Dominant Blockchain Power – With Help From Google, Amazon and Microsoft

Fidelity Investments’ chief strategist is heading a new bitcoin index fund that appears to be Wall Street’s latest play for high-dollar institutional crypto bets.

• “Wise Origin Bitcoin Index Fund I, LP” has a $100,000 minimum buy-in and a high-ranking executive officer to boot: Peter Jubber, head of strategy and planning for the increasingly crypto-friendly investments giant Fidelity.
• Disclosed in a Wednesday morning filing with the Securities and Exchange Commission, the fund is the latest example of Wall Street veterans warming up to bitcoin. Fidelity, one of the largest mutual fund firms in the U.S., is also leading the Street in bitcoin research and services.
• Wise Origin links back to Fidelity Investments via Jubber and Fidelity’s brokerage service and distribution subsidiaries, both of which are set to receive sales compensation from the new fund. It also shares a Boston office building with Fidelity.
• Fidelity declined to comment on its ties to the fund. A Delaware corporation called FD Funds GP is Wise Origin’s general partner, and Jubber is FD Funds’ president.
• While it is not known how the fund will approach bitcoin investing, Jubber waxed bullish on blockchain in a 2017 podcast sponsored by Fidelity. At the time he said his firm had sketched out 10 years of potentialities for the institution-disrupting tech.
• “Every incumbent should be spending time and money on this topic to understand it, at least to understand the threat,” he said in the podcast. “But I think there’s just a massive opportunity.”
• The fund has yet to raise any capital from investors.

Read more: Fidelity’s Man: Can Tom Jessop Bridge Crypto and Wall Street for Good?

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• US Democrats Ask Trump Administration for Details on Terrorist Crypto Seizures
• Darknet’s Largest Marketplace Still Offline; Fears of Exit Scam Rise
• South Korean Crypto Exchange Coinbit Seized Over Allegations of Massive Wash Trading
• Bitwage Rolls Out Tax Calculator Tool as IRS Ramps Up Crypto Pressure

FTX acquired Blockfolio, ConsenSys acquired Quorum and police have seized the third-largest exchange in South Korea. And news broke the U.S. Securities and Exchange Commission (SEC) has formalized new “accredited investor” rules.

You’re reading Blockchain Bites, the daily roundup of the most pivotal stories in blockchain and crypto news, and why they’re significant. You can subscribe to this and all of CoinDesk’s newsletters here. 

Breaking news

The U.S. Securities and Exchange Commission (SEC) has formally adopted new accredited investor rules, expanding the group of Americans who can invest in private securities.

Related: First Mover: Binance’s New DeFi Futures Let Crypto Traders Bet on Decentralization

The new definition, which lets individuals holding certain licenses meet the definition of “accredited investor,” was released for public comment in December 2019.

Accredited investors in the U.S. – which currently include individuals who have a net worth of more than $1 million, annual income greater than $200,000 or entities that meet certain legal requirements – have access to private financial markets the broader public does not.

Still, the move isn’t broadly expanding the list of individuals who can take part in the private markets. Zachary Kelman, a partner at Kelman Law, told CoinDesk shortly after the proposal was unveiled in December that “Wall Street insiders” and similar individuals may benefit most.

Drew Hinkes, general counsel at Athena Blockchain, similarly told CoinDesk at the time that more clarity was needed on what type of credentials might qualify individuals to become accredited investors.

Related: Blockchain Bites: Bitcoin’s ‘Rich List,’ Ethereum’s Volatility, DeFi’s Shakeup

“The proposed modernization would appear to include persons who are licensed to sell securities but who otherwise did not previously qualify to buy private placements as accredited,” he told CoinDesk via Telegram.

Though this may not grow the investor pool by that much, he noted. 

Top shelf

Retail acquisitions 
Derivatives exchange FTX has acquired Blockfolio in a $150 million cash, crypto and equity deal. Discussions began nine months ago, and play into FTX’s vision of becoming a retail and mobile-friendly exchange. Antigua and Barbuda-based FTX is ranked first by order-book liquidity and seventh by 24-hour volume, having been founded last year, CoinDesk’s Zack Voell reports. Blockfolio, founded in 2014, has six million cumulative downloads and sees 150 million impressions on its news and portfolio tools.

Exchange hosed
Meanwhile, Coinbit, South Korea’s third-largest cryptocurrency exchange, appears to have been seized by police over allegations it faked most of its trading volume, CoinDesk EU News Editor Daniel Palmer reports. Exchange insiders and police said up to 99% of the platform’s trading volume was “manipulated,” or washed, using “ghost” accounts – totalling over 100 billion won ($84 million) in faked income. Seoul Newspaper, which broke the news, said it had seen the books and that 99% of recorded trades could not be associated with deposits or withdrawals.

Acquire, invest, interoperate?
ConsenSys will acquire Quorum, the enterprise blockchain platform developed by JPMorgan Chase, with the mega-bank becoming a customer of ConsenSys. All enterprise work being done at ConsenSys will now fall under the new “ConsenSys Quorum” brand, and ConsenSys plans to merge its existing protocol engineering roadmap with Quorum, including locking down interoperability between the other enterprise Ethereum client Hyperledger Besu. Also announced, JPMorgan has made an undisclosed strategic investment in ConsenSys, which is in the process of raising funds, CoinDesk’s Ian Allison reports. 

$1B Ethereum exploit
Over $1 billion worth of tokens on the Ethereum blockchain are missing a software standard released in 2017, setting them up to be hijacked and drained from trading exchanges, according to new research. The vulnerability, called a fake deposit exploit, was pinpointed in 7,772 issuers of ERC-20 tokens, according to several university researchers. A hacker can fraudulently siphon exorbitant amounts of funds at nearly no cost by manipulating code in the smart contracts of ERC-20 tokens listed on cryptocurrency exchanges with deficient transaction verification methods.

Darknet down
Top darknet site Empire Market has been offline for more than three days, prompting fears of an exit scam. According to a Tuesday report by Darknetstats, the site, the most trafficked darknet marketplace, was taken offline on August 22. John Marsh, a Darknetstats representative, raised concerns Empire’s administrators could have absconded with an estimated 2,638 bitcoin ($30.2 million). Empire Market admin Se7en dispelled the rumors. There’s plenty of speculation, but nothing “concrete” about what has happened to the site, CoinDesk’s Sebastian Sinclair reports.

Quick bites

• Another Bitcoin Lightning Startup Is Working With Visa to ‘Fast Track’ Card Payments (Alyssa Hertig/CoinDesk)
• Australian Payments Firm Sues Ripple for Use of PayID Trademark (Sebastian Sinclair/CoinDesk)
• IRS, Ignoring Its Own Watchdog, Sends Letters About Crypto Taxes Once Again (Danny Nelson/CoinDesk)
• How State Channels aims to make torrenting cool again (Saniya More/The Block)
• Aave’s Price Rose 20,000% in Ethereum’s DeFi Explosion (Daniel Phillips/Decrypt)

At stake

Ribbit leaps
Ribbit Capital, an investor in fintech startups and early backer of crypto, is seeking to raise $350 million for a “blank check” company that would make acquisitions.

The special-purpose acquisition company (SPAC), Ribbit LEAP Ltd., filed a prospectus with the Securities and Exchange Commission late Tuesday, only mentioning cryptocurrency twice in passing, in passages that describe Ribbit Capital’s range of investments.

Unlike traditional publicly traded companies, where major acquisitions are subject to shareholder approval, a SPAC asks for wide latitude to make purchases (hence the term “blank check”), CoinDesk Executive Editor Marc Hochstein reports.

“Our shareholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority of our shareholders do not support such a combination,” warns the risk factors section of the Ribbit Leap prospectus.

Ribbit has led a seed round for Bobby Lee’s Ballet crypto wallet startup in 2019, and invested in Coinbase, Revolut, Robinhood, Xapo, Chainalysis, Figure Technologies and CRB Group.

While it’s unclear how much Ribbit Leap will focus on crypto or blockchain acquisitions, the filing comes at a time of renewed exuberance in the sector. Aside from the bull run in coin prices, fledgling exchange INX Ltd. has launched an on-chain regulated initial public offering, and heavyweights Coinbase and Ripple are reportedly eyeing public listings.

Market intel

Futures liquidated
Bitcoin’s latest price drop to $11,400 has forced out weak hands in the derivatives market, according to CoinDesk’s Omkar Godbole. The top cryptocurrency by market value fell by over 3.5% to levels near $11,100 on Tuesday, according to CoinDesk’s Bitcoin Price Index, triggering sell liquidations worth nearly $50 million in futures contracts listed on cryptocurrency exchange BitMEX. “The positives of last night’s move was that it cleared out a lot of the weak leverage longs,” Singapore-based QCP Capital said in a Telegram post, in reference to the perpetuals liquidations. 

Bet on decentralization
The fast-growing realm of decentralized finance – semi-autonomous exchanges and lenders erected from interconnected systems of digital tokens and coding atop the Ethereum blockchain – is one of the hottest corners of the crypto industry this year, with $7 billion of value locked, a 10-fold increase over the start of 2020. Now, the big centralized crypto exchanges are finding a way to cash in on the mania, introducing indexes tied to the fate of “DeFi” tokens and new futures contracts and other types of derivatives. For traders, these indexes provide a way to speculate on decentralized finance without going all in on any single project.

Tech pod

Wrap it up?
Digital asset trust company BitGo is considering building an Ethereum sidechain for wrapped bitcoin (WBTC), amid historic highs in Ethereum fees. CTO Ben Chan said the company is “reaching out” to community partners to build an alternative for its popular product, an ERC-20 token with a 1-1 peg to bitcoin, which has become a key component of the decentralized finance space. BitGo currently secures some 46,000 BTC (~$500 million) through a custodial patchwork and is not “committed to anything in 2020.” Ethereum fees peaked on Aug. 13, with little sign of abating. 

No government!
Liquity is a DeFi project that wants to launch without token governance, CoinDesk’s Brady Dale reports. It has started running ideas for farming schemes by its early supporters, ahead of its stablecoin mint that works much like MakerDAO, lending against collateral with a low-volatility token. Notably, Liquity’s smart contract will adjust as needed without a governance committee of token-holding people. “All of the system parameters are automatically controlled by the algorithms,” CEO Robert Lauko said.

Podcast corner

Unintended consequences
As companies have to shift their business model to contend with low interest rates, the largest find themselves in a comparatively better situation.

Who won #CryptoTwitter? Related Stories

• First Mover: Ether Price Swings Make Bitcoin Look Tame as DeFi Speculation Spreads
• Blockchain Bites: Aave’s Advance, BitMEX’s Block, Turkey’s Bitcoin Trot

The U.S. Securities and Exchange Commission (SEC) has formally adopted new accredited investor rules, expanding the group of Americans who can invest in private securities.

The new definition, which lets individuals holding certain licenses meet the definition of “accredited investor,” was first released for public comment in December 2019. Accredited investors in the U.S. – which currently include individuals who have a net worth of more than $1 million, annual income greater than $200,000 or entities that meet certain legal requirements – have access to private financial markets the broader public does not.

Read more: SEC Proposal Would Broaden ‘Accredited Investor’ Definition

Related: Boontech, Founder Pavithran Settle SEC Charges Over Fraudulent ICO and Registration Violations

The SEC oversees regulated token offerings in the U.S., and has cracked down on unregulated offerings as illegal securities sales. Wednesday’s move helps grow the pool of Americans who can compliantly invest in token sales.

Still, the move isn’t broadly expanding the list of individuals who can take part in the private markets. Zachary Kelman, a partner at Kelman Law, told CoinDesk shortly after the proposal was unveiled in December that “Wall Street insiders” and similar individuals may benefit most.

Andrew Hinkes, an attorney with Carlton Fields, similarly told CoinDesk at the time that more clarity was needed on what type of credentials might qualify individuals to become accredited investors.

On Wednesday, he said on Twitter the new definition was “not meaningful,” at least for now.

Related: Stacks Foundation Will Soon Put Those 100M Tokens to Work

“The proposed modernization would appear to include persons who are licensed to sell securities but who otherwise did not previously qualify to buy private placements as accredited,” he told CoinDesk via Telegram.

As was the case in December, the potential to add certain academic credentials or similar certifications might grow the space more, but this has yet to be properly defined.

Read more: Closer Look at SEC ‘Accredited Investor’ Revamp Suggests Little Will Change

Indeed, as Hinkes pointed out, the SEC itself acknowledges the expanded definition might not grow the pool of accredited investors that much. The document released Wednesday states:

“We do not expect that number of newly eligible individual accredited investors to be significant compared to the number of individual investors that currently are eligible to participate in private offerings, and (2) we expect the amount of capital invested by such newly eligible individual investors to have minimal effects on the private offering market generally.” 

The document indicates that only individuals with Series 7, 65 or 82 certifications would qualify for now.

Hinkes said the move is still promising, however.

“The modernization reflects the SEC’s willingness to continue to consider further expansion of the definition to include other certifications or credentials and includes an invitation for the public to offer suggestions,” Hinkes told CoinDesk on Wednesday.

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Fiat and crypto payments platform Wirex announced Wednesday it has partnered with Railsbank to replace insolvency-facing Wirecard as its card provider for the Asia-Pacific region. 

• According to the announcement posted on the firm’s website, customers with existing Wirex cards have already been migrated to Railsbank’s cards and there would be no disruption in Wirex’s payment services during the transition. 
  
• The firm’s announcement said Wirex has about 3 million customers who use its multi-currency card that allows for both fiat and crypto payments. 
  
• The firm’s previous card provider, Wirecard, is facing insolvency proceedings after a $2.1 billion hole was discovered in its balance sheet in June earlier this year. 
  
• According to a recent report by German local media, one of the Wirecard executives wanted in connection with the fraud, Jan Marsalek, surfaced in western Moscow and is being sheltered by Russia’s largest secret service, the military-controlled GRU. 

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Nasdaq-listed cryptocurrency mining company Marathon Patent Group signed a letter of intent to acquire the mining-as-a-service company Fastblock Mining, founded in 2014, in an all-stock deal.

• Marathon will acquire Fastblock for 8,658,009 common shares, currently trading around $2.48, giving the deal a total value of about $22 million.
• After deploying Fastblock’s 3,304 ASIC miners, Marathon’s mining power will increase by 208 petahash per second, according to the announcement.
• Marathon also said the deal will cut its overall cost to mine bitcoin (BTC) from $7,400 per BTC to $3,600 per BTC due to the lower-than-industry-standard electricity cost of $0.0285 per KwH.
• Fastblock has been “actively seeking a partner that could help us build one of the largest bitcoin mining companies in North America,” according to Fastblock CEO Bernardo Schucman.
• Schucman will stay on with Marathon after the deal and become its head of mining operations.
• Marathon said it will work with Fastblock’s management team to expand the current power capacity in Fastblock’s Atlanta facility from of 15MwH to 45MwH. The facility may be expanded up to a maximum of 100MwH of power should Marathon’s expansion efforts require additional power, the company said. 
• The acquisition is the latest move in Marathon’s push to rapidly expand its mining operations in light of the recent runup in BTC. On Monday, Marathon announced its receipt of 1,300 new mining machines –⁠ WhatsMiner M31S+ and S19 Pros –⁠ with 1,000 additional S19 Pros expected to arrive by December.
• Marathon said it expects the acquisition to close by the end of September.

Update (August 26, 15:30 UTC): This article has been updated with the company’s halving of mining costs and additional information about Bernardo Schucman.

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