Month: September 2018

What Will Lead to a Decoupling of Cryptocurrencies?

As is abundantly clear from any volatility charts available for the main crypto currencies, while the degree of the swings may vary, cryptocurrencies in general tend to largely trade in tandem. But as in fiat, cryptocurrencies have their own properties and characteristics, which begs the question:
What Will Lead to a Decoupling of Cryptocurrencies?

The differences between bitcoin (BTC), ether (ETH) and ripple (XRP) are manifold. The simple fact that few have been able to reach consensus on whether various cryptoassets are a commodity, a currency or a security, suggests that these assets are not all the same. Some argue each of these represent, respectively, a commodity, a currency and a security. So far, just CFTC is on record saying certain cryptoassets are commodities, a view upheld earlier this year by a US federal judge, who upheld that cryptos are commodities, while the SEC has said BTC and ETH are not securities. So official designations have been murky at best.

Consensus Protocols: PoW vs PoS

By Bob Bonomo, CEO, Blockchain Innovation Group and President, Bob Bonomo LLC
Blockchains are examples of distributed database technology, since they store transactional data across many computers rather than in a single, centralised system.
In traditional centralised systems, where services run or data is stored on a single server, there is no concern about data synchronisation: all the data is simply present on that one machine.
The distributed nature of blockchains improves data security, since the multiple copies of data make it extremely difficult and costly to tamper with or introduce forged transactions, while also increasing network reliability/uptime, since blockchains are resilient and continue to function if a manageable set of nodes become unavailable.

Proof of Work vs Proof of Stake What to Expect from Ethereum’s Protocol Shift

It’s early days, but Ethereum, essentially a decentralised, blockchain-based, world computer, is changing its consensus protocol from Proof of Work to Proof of Stake. Julie Ros speaks with a few crypto traders about what the key differences are between the protocols and what they think of Ethereum’s bold move.

Ethereum, the blockchain-based network that was proposed in 2013 and released in mid-2015 to provide a virtual “world computer” as the base layer for decentralised apps (DApps), has begun steps to move the methodology for confirming transactions from Proof of Work (PoW), whereby miners compete to unlock and upload blocks to the Ethereum blockchain, to a Proof of Stake (PoS) methodology, which establishes validators that stake an investment to participate.

Coote Named as MD at Cobalt

FX post-trade processing network provider Cobalt has appointed FX industry veteran Darren Coote as managing director.
Coote has been working with Cobalt since the end of 2017 as a strategic advisor and will now take on responsibility for the day to day management of the company. The firm says the appointment comes at a key time for Cobalt as the company launches and looks to significantly scale its business. Coote brings over 25 years’ experience in the FX business to Cobalt.

Bambury New CTO at Integral

Integral has announced the appointment of ex-ION Trading CEO Gavin Bambury as its chief technology officer (CTO).
He brings more than two decades of trading and technology experience to his role at Integral. In addition to serving as both CEO and COO at ION Trading, Bambury has also held positions as global head of business re-engineering at Deutsche Bank and CTO of fixed income, currency and commodities at Citigroup.
Harpal Sandhu, CEO of Integral, adds, “Gavin is an amazingly talented designer, technologist and leader.”

Birchall to Head LCH in Asia as Robinson Relocates to London

Kate Birchall has been appointed head of Asia Pacific for LCH Ltd, effective 15 October 2018.
Based in Sydney, she will report to Martin Pluves, CEO, LCH Ltd, and will be responsible for LCH’s business in Asia Pacific, including the CCP’s existing OTC derivatives clearing operations in Sydney and Tokyo.
LCH says Asia Pacific is a region of strategic growth for the firm, which is directly licenced in Australia, Hong Kong, Japan, Singapore. Members and clients from 12 APAC countries currently use LCH’s clearing services. ?

A Question of Faith: Asset Managers and the Fix

Benchmark fixes have been immersed in controversy for the past five years, but anecdotal evidence sees no shift in asset manager attitudes to them. Colin Lambert asks, will these firms ever desert the Fix?

If there has been one lightning rod for controversy in what has been a pretty turbulent period for the foreign exchange industry it has been benchmark fixes. Banks have been fined, traders and managers have been dismissed, and some are facing legal sanctions, including jail, thanks to various activities all of which were centred on the WM and European Central Bank fixes.

And Finally…

I want to follow up on last week’s column about the lack of risk takers in FX.
Firstly, several of you reached out to me to share your thoughts and clearly there are some concerned people out there who believe the foreign exchange industry is vulnerable to more flash type events because of the lack of skilled people able to take risk. Secondly, i had an interesting conversation with a friend about the lack of diversity in the FX risk/trading role.

BIS Paper Maps Out a Path to Crypto Regulation

A new paper included in the latest Bank for International Settlements Quarterly report argues that regulation of cryptocurrency markets can be effective, especially at national level.
The report, by Raphael Auer and Stijn Claessens at the BIS, notes that cryptocurrency markets are often seen as operating outside the reach of national authorities, but it also points out that can also apply to other asset classes and emergent technologies. What sets cryptocurrencies apart is that they can function without institutional backing and are intrinsically borderless, which, the report argues, raises the question of whether one can expect regulation – in particular national regulation – to be effective.

In the FICC of it

It’s a bumper edition of In the FICC of it this week as Colin Lambert and Galen Stops prepare to head off to Forex Network Chicago 2018, with both giving previews of the main issues that they plan to tackle on the panel sessions that they are moderating.
The pair also discuss a report by the New York state Attorney General, which highlighted some major concerns about some of the crypto trading venues operating today. But the most interesting aspect of this story is the response of one exchange that decided to hit back at the AG in rather spectacular fashion – Lambert and Stops highlight some of the shots fired on (where else?) Twitter.