Articles tagged by Crypto
CME Group plans to launch bitcoin futures in the fourth quarter of 2017, pending all relevant regulatory review periods.
The new contract will be cash-settled, based on the CME CF Bitcoin Reference Rate (BRR), which serves as a once-a-day reference rate of the US dollar price of bitcoin.
Bitcoin futures will be listed on and subject to the rules of CME.
"Given increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a bitcoin futures contract," says Terry Duffy, CME group chairman and CEO. "As the world's largest regulated FX marketplace, CME Group is the natural home for this new vehicle that will provide investors with transparency, price discovery and risk transfer capabilities."
Speaking at a recent buy side event hosted by Profit & Loss and sponsored by CME Group in New York, Tim McCourt, managing director and global head, equity products and alternative investments at CME Group, talked about the nuts and bolts behind the exchange’s new bitcoin futures contracts.
In a fireside chat about the CME’s bitcoin futures contract – which launched in December when the excitement around bitcoin was spiking and the cryptocurrency was trading at over $18,000 – McCourt was quick to emphasise that the exchange operator is pleased with the performance of these products thus far.
McCourt noted that, “1,500 in ADV [Average Daily Volume] and 1,500 in OI [Open Interest], with 800 accounts and global adoption of the product – these are all very strong indicators of long-term success for a contract, and actually it’s an exception to have reached these numbers so quickly”.
Mobile payments and cryptocurrency startup, Circle, has acquired the crypto-asset exchange Poloniex.
Circle is backed by $140 million in venture capital from investors including Goldman Sachs, IDG Capital Partners, Breyer Capital, Accel Partners, General Catalyst Partners, Baidu, CICC Alpha, EverBright, WangXiang and CreditEase.
Circle has two main business lines. According to the company, “Circle Pay helps people around the globe connect to one another and share value just as they would share any other kind of content on the open borderless Internet; Circle Trade serves institutions and investors as one of the world’s largest providers of crypto asset liquidity.”
Circle says that it is also planning to launch an app that will enable individuals to tap into crypto-asset investment “through a simple, seamless, mobile experience”.
Genesis Trading, which offers two-sided liquidity for digital currencies, has today launched a new affiliate, Genesis Global Capital, an institutional digital currency lending business.
Genesis Capital will allow institutional investors the opportunity to borrow bitcoin, ether and other digital currencies in large quantities over fixed-terms.
“Having been incubated by our affiliated company, Genesis Trading, we feel we’re in a great position to truly understand the pulse of the market and identify evolving industry needs quicker than most. We believe now is a great time to offer an institutional-focused lending service because it will increase general li
In a speech delivered today, Bank of England Governor, Mark Carney, stated that crypto-assets don’t currently pose a risk to the stability of financial markets, even as he declared that cryptocurrencies are “failing” as a form of money.
Speaking at the inaugural Scottish Economics Conference at Edinburgh University on the subject of the future of money, Carney’s speech was heavily focused on cryptocurrencies.
Addressing the question of how well cryptocurrencies fulfill the traditional role of money, Carney argued that the answer has to be judged against the functioning of the entire cryptocurrency ecosystem. This ecosystem includes exchanges that enable the buying and selling of cryptocurrencies, miners who create new coins and verify transactions and the wallet providers who effectively offer custody services.
The US Securities and Exchange Commission (SEC) has said that certain exchanges listing crypto-assets need to register with the agency because they offer trading in products that meet the definition of a “security”.
In particular, it is targeting exchanges that list crypto-assets linked to Initial Coin Offerings (ICOs).
“A number of these platforms provide a mechanism for trading assets that meet the definition of a "security" under the federal securities laws. If a platform offers trading of digital assets that are securities and operates as an "exchange," as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration,” says the SEC in a statement today.
Cryptalgo Holdings, a company focused on cryptocurrency algo trading and high-end cryptocurrency brokerage services to financial institutions, announced today that Ed Mount was appointed Chief Advisor, Trading Technologies.
Mount is Co-Founder of Elysium Technology Group, which provides FX risk management and post-trade processing systems designed for financial institutions. Previously, he served as Managing Director and Global Head of Electronic FX Trading at both Nomura and Royal Bank of Scotland, and Global Head of Commodities and Precious Metals for UBS and Swiss Bank Corporation. He also was a co-founding partner and portfolio manager with Elysium Capital Group from 2001-2007.
Although cryptocurrencies have become too big for institutional investors to ignore, there are still significant barriers deterring them from entering the crypto space, said speakers at Profit & Loss’ 2018 Latin America conference in Mexico City.
Speaking on a panel at the event, Michael Moro, the CEO of Genesis Trading, argued that a lot of traditional financial services firms were caught out by both the popularity and the longevity of crypto-assets.
“I believe that – especially in the US – that the major institutions got caught. I don't believe they ever wanted to deal in cryptos, they thought it was a fad or a ponzi scheme and were waiting for the bubble to burst and the whole thing to go away.
Bloomberg and Galaxy Digital Capital Management (GDCM), a digital asset management firm founded by Michael Novogratz, have launched the Bloomberg Galaxy Crypto Index (BGCI).
The index is designed to track the performance of the largest, most liquid portion of the cryptocurrency market. The BGCI is market capitalisation-weighted and measures the performance of 10 USD-traded cryptocurrencies, including bitcoin, ether, monero, ripple, and Zcash.
The index constituents are diversified across different categories of digital assets, including stores of value, mediums of exchange, smart contract protocols, and privacy assets.
CME Group has launched a reference rate for ether, the native cryptocurrency of the Etherium network.
The CME CF Ether-Dollar Reference Rate, which will provide a daily benchmark price in US dollars at 4 pm London time, and CME CF Ether-Dollar Real Time Index, which will allow users access to a real-time ether price in US dollars.
Both the Ether Reference Rate and Ether Real Time Index will be calculated by Crypto Facilities and will be based on transactions and order book activity from two cryptocurrency exchanges: Kraken and Bitstamp.
In a release issued today, smartTrade Technologies revealed that it has added cryptocurrencies to its FX trading platform, LiquidityFX (LFX).
“The cryptocurrency market is growing fast, and a large percentage of the current trading volumes is concentrated on the top 10 cryptocurrencies, which accounts for about 70% of daily turnover. It is also highly decentralised and finding the best price is, at best, opaque and challenging when trading,” says the firm.
The release continues: “SmartTrade overcomes these challenges with its cryptocurrencies offering. LiquidityFX (LFX) platform includes connectivity to the major cryptocurrency exchanges and clients can leverage the sophisticated LFX aggregation system to obtain a normalised view of the cryptocurrency liquidity, to place orders and manage algorithms with Smart Order Routing (SOR) logic in a transparent manner.”
Genesis Global Trading has received approval from the New York Department of Financial Services (DFS) for a BitLicense.
The license enables Genesis to facilitate the trading of several digital currencies, including bitcoin, with its institutional trading partners.
Genesis is the first New York-based trading firm to receive the license, having prior to now operated under a "safe harbour" provision with DFS that enabled digital currency trading.
"Regardless of the fact that cryptocurrencies trade worldwide, New York is still a major financial centre and so to have a firm here approved under this regime is a milestone moment for all of us,” Michael Moro, CEO of Genesis, tells Profit & Loss.
JP Morgan has reportedly created a new position at the bank, that of head of cryptoassets strategy, and named Oliver Harris, previously head of the bank’s in-residence programme for fintech startups, to the role.
Harris will operate as part of JPM’s blockchain project, headed by Umar Farooq and investigate cryptocurrency initiatives that can be taken to market. He will also lead the execution of the project, working closely with Christine Moy, programme lead for the bank’s Blockchain Centre of Excellence.
I do tend to give press releases about crypto the most perfunctory of glances – often because it’s yet another firm claiming to be taking a new and innovative approach when it is nothing of the sort. So when I saw the headline, “Crypto Prices Driven Purely By Mood of Investors” I gave the press release a minute or two fully expecting to bin it. I didn’t, because firstly market psychology fascinates me (I know – I need to get out more) but also because the findings of the research stressed both the challenges and opportunities afforded by crytpocurrencies.
Michael Oved, co-founder of AirSwap, met with Profit & Loss to discuss his vision for the potential of a decentralised trading platform based on the Ethereum blockchain. Previously an algo trader at Virtu Financial, Oved explains how he took lessons from the FX market and applied them to crypto trading to create a peer-to-peer platform.
Profit & Loss: AirSwap was designed around an Indexer, which acts as a search engine, matching up buyers and sellers, rather than using an order book model. With your background as an algo trader at Virtu Financial, did you look to the FX market for ideas when developing AirSwap?
Thus far, despite the hype and excitement around cryptocurrencies, most CTAs haven’t exactly been in a rush to start trading these assets. However, as Galen Stops reports, this might be about to change.
As Cboe and CME both prepared to launch bitcoin futures contracts in December 2017, the price of a single bitcoin roared upwards to peak at over $19,000.
For retail investors, the attraction of this particular cryptocurrency was that the price had been going up all year, having traded at around $985 per bitcoin in January of last year. For professional traders, the attraction of bitcoin was that it was an asset that was actually moving, it was uncorrelated to other assets and therefore offered diversification benefits and, on top of all this, was almost exclusively being traded by retail punters.
In the latest edition of Profit & Loss' podcast series, In the FICC of It, managing editor Colin Lambert and editor Galen Stops discuss some of the news stories that have hit the headlines over the past week. They discuss the surprising departure of Fastmatch CEO Dmitri Galinov, the drivers of latest deal in the FX trading platform world and the challenges and opportunities facing the CTA industry. They close out with a few quick thoughts on the first anniversary of the FX Global Code and as you would expect, they are "off message"!
The value of bitcoin dropped from from $7,256 to a low of $6,651 on Sunday night, following the news that the South Korean cryptocurrency exchange, Coinrail, was hacked over the weekend.
In a statement on its website on Monday, Coinrail confirmed that there was a “hacking attempt” on June 10.
The statement continues: “At present, 70% of your Coinrail total coin/token reserves have been confirmed to be safely stored and moved to a cold wallet and are in storage. Two-thirds of the coins confirmed to have been leaked are covered by freezing/recalling through consultation with each coach and related exchanges. The remaining one-third of coins are being investigated with investigators, relevant exchanges and coin developers.”
Coinrail says that the exact extent of the hacking is still be determined.
Thomson Reuters (TR) announces the expansion of its sentiment data offerings to track the top 100 cryptocurrencies through its partnership with MarketPsych Data, a firm that focuses on quantitative behavioral science.
The new MarketPsych Indices (TRMI) package uses machine learning and natural language processing to measure a breadth of emotional and topical items across news and social media sites that may drive market participant behaviour in cryptocurrency markets. The firm claims the addition is notable because online communications and information flow are more significant drivers of cryptocurrency value than they are for traditional financial assets.
Broadway Technology is extending its full software stack to support firms trading cryptoassets.
“We’re basically taking our entire software stack - which is already asset class agnostic - and making it available to both buy side and sell side firms that are trading cryptos. Fundamentally, what we’re trying to do is provide institutional market participants with much better software and access to what is a pretty volatile and challenging space for them to trade in,” explains Tyler Moeller, co-founder and CEO of Broadway.
This software stack can be used to power a firm’s entire risk management, trade management and e-commerce capabilities - meaning that it can be used for order routing, algo execution, quoting prices, hedging and risk and credit management.
At the start of 2017, a single bitcoin was valued at less than $1,000, yet by mid-December it had almost hit $20,000. Investors were pouring into the space, Initial Coin Offerings (ICOs) were being launched left, right and centre and - given the limited supply of bitcoins that can ever exist - some market commentators were making wild predictions about how high the value of this asset would ultimately go.
But despite starting the year at around the $15,000 mark, the price of bitcoin has fallen to $6,671 at the time of writing and other major cryptocurrencies have suffered a similar decline. So what went wrong?
OTC Exchange Network (OTCXN), which uses proprietary blockchain technology in a bid to eliminate trading counterparty and settlement risk on their trading network, has acquired Ogg Trading, a provider of FX trading technology.
Through this deal, which closed on June 18, 2018, OTCXN will acquire all Ogg Trading’s technology including the dark pool that it previously ran in partnership with Bloomberg. The dark pool is a complete matching engine technology stack. The plan is to add market data publishing to this platform in order to create a regular central limit order book (CLOB) with a lit pool of liquidity. Ogg Trading also has a liquidity aggregator and smart order router (SOR) system that can be deployed to run a quote driven market place.
OTC Exchange Network (OTCXN), a blockchain-powered capital markets infrastructure company, today announced that it completed its first live test trades for the exchange of tokenised fiat currency and bitcoin.
The infrastructure provider says that it believes this to be the first time that tokenised US dollars and tokenised bitcoin have been exchanges between two separate trading accounts over an electronic trading platform with assets held in safekeeping at a neutral custodian and digitised on blockchain.
Currently, institutional traders usually conduct block trades of fiat currency and cryptocurrency over e-mail and chat, relying on the reputation and credibility of their counterparties to honor their part of the trades, often taking hours to confirm and settle. The OTCXN platform aims to remove trading counterparty and settlement risk with an atomic exchange of assets on high-performance blockchain and facilitates settlement of transactions instantly, not in hours or days.
In this week’s In the FICC of It podcast, after last week’s confident prediction of a German World Cup win Profit & Loss’ managing editor Colin Lambert puts a hex on another team by predicting them as winners and editor Galen Stops volunteers to play fact checker on statements made by panellists at a conference.
They also discuss this week’s news, including the Global Foreign Exchange Committee meeting, BNY Mellon launching an options business, the latest from the crypto world and the latest evidence (unproven) of regulatory arbitrage involving Australia and the US.
On a more sombre note they also pay tribute to FX industry veteran Paul Chappell, who passed away this week, with a couple of lighter hearted stories involving him.
David Mercer, CEO of LMAX Exchange, talks about why a lack of credit, rather than custody solutions, is the biggest single challenge facing institutional market participants wanting to trade cryptoassets.
LMAX offers a crypto custody solution through LMAX Digital, and Mercer concedes that having platforms provide custody services is not necessarily ideal from a market structure perspective.
However, he quickly adds: If you look at LMAX Exchange’s business model I’ve always been regulated as a broker-dealer and I’ve alway been regulated as an MTF and there’s Chinese Walls between the two.