CoinDesk Crypto

Remember when crypto exchanges were strong-armed into delisting privacy coins like zcash (ZEC) in order to protect their brittle banking covenants?

But crypto keeps moving, and today ZEC is making its debut within the bustling decentralized exchange (DEX) ecosystem in the form of wrapped zcash (WZEC). Announced Wednesday, WZEC is the first asset to be launched by “Wrapped,” a partnership between Ethereum tokenizers Tokensoft and qualified custodian Anchorage, with over-the-counter (OTC) liquidity provided by CMS Holdings.

Wrapping is the act of taking a blockchain asset like bitcoin and issuing an equivalent representation on another blockchain such as Ethereum. Wrapped bitcoin (WBTC), for instance, is an ERC-20 token that’s backed on a 1:1 basis with bitcoin held in reserve by qualified custodian BitGo Trust.

Related: Market Wrap: Bitcoin Tests $12K; Ethereum Fees Fall to 3-Month Low

In a similar fashion, wrapped zcash is a 1:1 representation of zcash on Ethereum held in custody by Anchorage. Wrapped tokens provide a big shot of liquidity to DEXs and offer otherwise staid assets the ability to frolic in the wilds of decentralized finance (DeFi).

Read more: Wrapped Bitcoin Sees Record $57.1M in Tokens Minted by CoinList for Customers

“I’m thrilled that there is such interest, and that people can, and do, innovate and deploy extensions on top of Zcash without the Electric Coin Company’s knowledge or approval,” Zooko Wilcox-O’Hearn, Zcash founder and Electric Coin Company CEO, told CoinDesk in a direct message.

“I also agree that it’s great for people to have more alternatives to centralized exchanges (CEXs), and the way that CEXs have to comply with arbitrary demands from their banks,” he added.

Tokenized ZEC

Related: Cryptographers Are Always Going to Be ‘One Step Ahead’ of Regulators: Monero’s Spagni

Today, zcash can be used in either of two ways: transparent or shielded. The shielding of the transacting crypto wallets enables a degree of privacy not found on the public-by-default Bitcoin blockchain, for example. It’s ZEC’s shielding capabilities that make regulators nervous, narrowing the scope somewhat for this clever use of technology.

The wrapped version of zcash on Ethereum “really brings the best of both worlds,” said Mason Borda, CEO of Tokensoft. 

“Obviously Zcash enables shielded transactions, so now holders of zcash can have assets in a shielded pool and wrap a portion of these assets to use on Ethereum, maintaining their privacy,” said Borda. “They would love to use their zcash, but they don’t want to disclose how much they have. They just want that information private.”

Wrapping zcash on the Tokensoft platform for use on Ethereum also makes the shielded version of the coins more palatable to regulators, Borda believes. That’s because it involves a know-your-customer (KYC) process performed upstream, he said, plus the ZEC holder also has to meet with Anchorage’s compliance as a qualified custodian. 

Read more: Nearly $100M in Bitcoin Moved to Ethereum in July, Led by Retail Traders

“Wrapping the zcash and putting it on the Ethereum rails does open up the door for these jurisdictions to support this asset,” Borda said. “So it’s a big deal. It’s going to open up zcash to every other market out there that is currently concerned about enhanced privacy and shielded transactions.”

But doesn’t loading lots of KYC and compliance around zcash defeat the purpose of privacy coins in the first place?

“The goal with zcash was never to shield from authorities, regulators or your financial providers,” said Diogo Monica, co-founder and president of Anchorage. “The shielding of zcash came as a response to the fact that bitcoin is pseudonymous. So who you’re shielding from is the public at large and the internet at large. And so the fact that we’re using ERC-1404 standard allows us to guarantee on-chain that we have the advantages of regulation with the advantages of zcash on-chain anonymity.”

ZEC lite

Tokensoft developed the ERC-1404 standard for SEC-registered assets on Ethereum, a streamlining system that also involves Anchorage as custodian.  

The ERC-1404 is basically a template smart contract with compliance functions baked in, including the whitelisting of investors so regulators know exactly who everyone is.

“There are certain things we’re switching off, but other things we’re leaving on,” Borda said of WZEC’s ERC-1404 debut. “The main difference is that the whitelisting is off, so the tokens are ERC-20 compatible and freely transferable.”

Read more: Regulated US Exchange Gemini Now Offers Confidential Zcash Withdrawals

For its part, Anchorage became a qualified custodian in the state of South Dakota back in July 2019, following crypto custodian BitGo, which got the green light from state regulators in 2018.

“This is what Anchorage was built to do,” said Monica. “Anchorage was built to use private keys safely for active participation in blockchains. Our technology permits us to have better liquidity, and public auditability of every single asset that we have on the platform. And also our platform allows us to just add more wrapped assets in the near future.”

CMS Holdings, the institutional crypto firm founded by Bobby Cho of Cumberland and former Circle trader Dan Matuszewski, praised the new partnership.

“Wrapped is the best wrapping I’ve ever wrapped with,” Matuszewski quipped via email.

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Blockchain startup CasperLabs has banked $14 million from investors who pledged to secure its proof-of-stake Casper network at launch.

CasperLabs CEO Mrinal Manohar confirmed the private CLX token presale to CoinDesk and further revealed that Digital Strategies had led the investment, with headline participation from HashKey Capital and Blockchange Ventures, as well as 52 others. Nearly half of subscribers already held CasperLabs equity, he said.

All together, the 55 new CLX holders wield a share of the Casper network that Manohar said ranges “in the teens.”

Related: Kik, SEC Propose $5M Settlement Over $100M ICO, Ending Yearlong Battle

Casper’s future node runners lend an early security force to the Swiss-based company’s upcoming blockchain. Jumping on ahead of Casper’s mainnet launch, and even before the native token’s public sale, these “genesis validators,” as Manohar called them, will confirm transactions on the smart contract-based network when it goes live early next year.

“Everyone is mandated to be a validator,” said Manohar, adding the sale will “create the initial security of the network” that CasperLabs has no interest in raising alone.

Read more: CasperLabs Pivots Away From Ethereum to Fundraise With Its Own Blockchain

“It’s a completely open and permissionless system,” he said. 

Related: Indian Trade Finance Startup Raises $3.7M in Token Sale Led by Arrington XRP

CasperLabs is among the many lesser-known blockchain projects hoping to steal even just a sliver of crypto’s decentralized finance (DeFi) scene from Ethereum. Industry tracker DeFi Pulse now estimates that Ethereum blockchain DeFi projects are locking up over $10.6 billion in value. 

But with DeFi’s market leader struggling under high fees and long confirmation times – not to mention a long-promised network upgrade looming but hardly assured – Casper’s team is eager to prove that an upstart competitor can handle booming industry demand.

CasperLabs understands Ethereum’s scaling woes perhaps better than most. Ethereum Foundation developer Vlad Zamfir used to advise the company. But he’d left the project by March 2020, when CasperLabs said it was pivoting away from Ethereum.

Excitement for Casper’s mainnet launch is running high if the CLX round’s numbers are any indication. Manohar said the oversubscribed round brought in $4 million more than initially planned. All that cash came from 55 “medium-sized checks,” he said.

Coming one year after CasperLabs’ Series A sale raised $14.5 million, the fresh cash will fuel Casper’s 40 employees through their final pre-launch development, according to Manohar. Twenty-nine of them are engineers. Money’s “always gone very heavily into engineering” he said. 

Manohar has no plans to run another private sale before the public offering in “early Q1” 2021. And there’s no need to, he said. The sale’s primary function, now complete, was to establish Casper’s launch-day validators.

Also read: Validators Drop Off Ethereum 2.0 Testnets as Mainnet Release Looms

Next year’s public CLX sale, which CasperLabs has previously said would take the form of an “Exchange Validator Offering” on Singapore’s BitMax exchange, will give the public (but not U.S. investors) a shot at staging nodes as well. 

But Casper will be ready to go even without public buy-in.

“We’ll only do our first public sale once the network’s already decentralized,” he said.

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Litecoin (LTC) rose more than 10% on Wednesday, outperforming bitcoin (BTC) to top the list of the best-performing major cryptocurrencies after PayPal confirmed it’s entering the cryptocurrency market and included LTC on the list of cryptos its customers will be able to buy, sell and hold.

• LTC, the ninth-largest cryptocurrency by market value, jumped more than 12% to $52.64, the level last seen on Sept. 3.
• The surge came after PayPal, with 346 million active accounts around the world, pledged to make cryptocurrency “a funding source for purchases at its 26 million merchants worldwide.”
• Initially, the service supports BTC, ether (ETH), bitcoin cash (BCH) and LTC, the payments giant said.
• The announcement acted like rocket fuel to the crypto market overall as it may be a step to bringing crypto usage one step closer to the mainstream.
• BTC, the crypto market leader, jumped 6% to a fresh 2020 high of more than $12,700 before settling down to $12.688, up 5.99%, while ETH and BCH rose 4% and 7%, respectively.
• While LTC’s double-digit price rise is impressive, its relatively less liquid than BTC so a relatively big orders can have substantial impact on price.
• “LTC markets are thinly traded and its largely spot, so traders don’t have many ways to express sentiment other than trade spot,” CoinShares CSO Meltem Demirors told CoinDesk in a Twitter chat.

UPDATE: 17:40 UTC: Adds commentary on litecoin’s lack of liquidity.

Read more: First Mover: Privacy Is Litecoin’s Ace in the Hole as JPMorgan Touts Bitcoin

Related: PayPal Adds Bitcoin: Most Bullish News of the Year?

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The Coinbase- and Circle-backed CENTRE Consortium announced support for its USDC stablecoin on the Solana blockchain Wednesday, marking the dollar-backed asset’s fourth blockchain integration, after Ethereum, Algorand and Stellar, announced barely a week ago. 

Compared to Ethereum’s approximate rate of 15 transactions per second (TPS), Solana offers over 50,000 TPS, which Circle CEO Jeremy Allaire told CoinDesk helps USDC function “at scale and in a highly performant condition.” 

USDC was launched with the goal of creating technical and regulatory standards supervised by governments and regulators for a dollar-pegged money format and protocol, Allaire told CoinDesk. The stablecoin is “just now moving into the growth phase,” he added. 

Related: Harvest Finance Doubles Total Value Locked to $704M in One Week

Read more: Tether Still Dominates Stablecoins, but USDC and Dai Are Winning DeFi

USDC and USDT, the two largest stablecoins by market capitalization, have been rapidly expanding across new blockchains throughout 2020 as both stablecoins aggressively pursue cross-chain growth strategies. This year, five new protocols have announced support for one or both of the leading stablecoins. 

DeFi competitor?

In early September, Tether also announced its planned integration with the “ultra high-speed” Solana blockchain. 

Use cases for stablecoins now extend beyond simple trading and funds transfers, Allaire explained. Operating on multiple protocols is key for USDC to meet the needs of novel stablecoin use cases created by a burgeoning decentralized finance (DeFi) ecosystem.

Related: First Mover: PayPal Rushes In and Bitcoin Breaches $12K, While USDC Gains on Tether

Concurrent with its support on Solana, USDC announced a partnership with FTX; Serum, the exchange’s decentralized trading platform built on Solana; and Alameda research, the exchange’s sister company. 

As to whether USDC will continue to expand to other blockchains, Allaire told CoinDSesk “absolutely,” noting there are “many credible blockchains” that could be considered in the future for USDC support.

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A solution being implemented to safeguard against so-called 51% attacks on the Ethereum Classic (ETC) network may not be as secure as other alternatives, according to a new analysis.

This summer, the ETC blockchain suffered three such attacks in a month. Soon after, ETC Labs – leading organization supporting the network – announced it would roll out the Modified Exponential Subjective Scoring (MESS) solution as an “innovative and low-risk” means to mitigate the risk of future 51% attacks.

But, according to a report from the ETC Cooperative and Cardano developer IOHK on Tuesday, an analysis concluded that “the ‘MESS’ solution will not provide “robust security” and there’s “no guarantee that further attacks will not succeed.”

Related: Market Wrap: Bitcoin Slips to $11.2K; Uniswap Flows Dominate Ether

Further, MESS doesn’t provide “high confidence for stakeholders to reduce confirmation times to desirable levels,” the report reads.

A 51% attack occurs when a nefarious actor gains the majority of a network’s computing power, allowing them to carry out a reorganization (“reorg”) of blocks on the chain and potentially double-spend transactions.

MESS is designed to make large block reorgs up to 31 times more costly, in theory negating any profit motive behind 51% attacks.

The firms looked at various solutions proposed by developer teams from across the ETC community for the analysis, and said checkpointing and timestamping solutions would provide superior security.

The alternatives

Related: Market Wrap: Bitcoin Regains $10.6K; High-Balance Ether Addresses Decline

According to the report, timestamping enables ETC to base its security off another secure blockchain such as Bitcoin.

Meanwhile, checkpointing occurs when a “trusted authority” chooses a block to become the canonical chain all participants must follow, and cannot be later “dropped or reverted.”

ETC Co-op Executive Director Bob Summerwill said he hoped the report was the “first step” toward centralized decision making among ETC’s leadership, “allowing technical and other ecosystem proposals to be essentially peer-reviewed, improving them, and ensuring they are sound.”

The report also suggested the implementation of a “decentralized treasury,” providing an ongoing source of funding for the future development of the ETC platform.

“A democratic and transparent funding mechanism will also allow the ETC community to determine its future direction by allowing it to choose which innovations are incorporated into the ETC product offering,” it reads.

This, the report claimed, would ultimately allow ETC to “keep pace with and exceed the capabilities of other platforms.”

See also: ETC Labs Rolls Out Fixes to Thwart Further 51% Attacks on Ethereum Classic

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Bitcoin’s price clocked fresh 2020 highs on Wednesday after online payments company PayPal announced support for cryptocurrencies.

• The cryptocurrency was trading at $12,833, a gain of 7.3% in 24 hours, as of 17:00 UTC (1:00 p.m. ET).
• Bitcoin jumped to $12,481 during earlier U.S. trading hours to reach the highest level since July 2019, surpassing the previous 2020 high of $12,476 reached on Aug. 18, according to CoinDesk’s Bitcoin Price Index.
• PayPal launched a new service enabling its customers to buy, hold, and sell bitcoin, ether, bitcoin cash and litecoin, directly within the PayPal digital wallet.
• The move is expected to increase cryptocurrency’s utility as a funding source for digital commerce at PayPal’s 26 million merchants.
• “This PayPal news is the biggest news of the year in crypto. All banks will now be on a race to service crypto. We have crossed the rubicon,” large crypto investor Michael Novogratz tweeted.

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Bitcoin’s price clocked fresh 2020 highs on Wednesday after online payments company PayPal announced support for cryptocurrencies.

• The cryptocurrency jumped to $12,481 during the U.S. trading hours to reach the highest level since July 2019, surpassing the previous 2020 high of $12,476 reached on Aug. 18, according to CoinDesk’s Bitcoin Price Index.
• PayPal launched a new service enabling its customers to buy, hold, and sell bitcoin, ether, bitcoin cash and litecoin, directly within the PayPal digital wallet.
• The move is expected to increase cryptocurrency’s utility as a funding source for digital commerce at PayPal’s 26 million merchants.
• “This PayPal news is the biggest news of the year in crypto. All banks will now be on a race to service crypto. We have crossed the rubicon,” large crypto investor Michael Novogratz tweeted.

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• Nigeria Protests Show Bitcoin Adoption Is Not Coming: It’s Here
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• Bitcoin Price Hits Two-Month High Above $12,300
• PayPal Pledges to Bring Crypto to 26M Merchants, Confirming Market Entry

O(1) Labs’ lightweight blockchain project Mina, formerly known as Coda Protocol, has raised $10.9 million in a funding round co-led by Hong Kong-based Bixin Ventures and Singapore-based Three Arrows Capital.

Mina was set for mainnet launch in Q4 but O(1) Labs CEO Evan Shapiro told CoinDesk it has been delayed to early next year because “launching a blockchain near the holiday season is never a good idea.”

Mina’s lightweight design – it only takes 22 kb to store a copy of the Coda blockchain thanks to its reliance on zk-SNARKs – is meant to foster widespread adoption.

Related: UK-Listed Firm Mode Putting Up to 10% of Cash Reserves Into Bitcoin

“Mina addresses the failure of legacy blockchains like Bitcoin and Ethereum which, over time, pushes users out of participation,” Shapiro said.

Before launching on mainnet, Mina aims to finish its adversarial testnet with over 1,000 unique participants by the end of the year.

Read more: Coinbase, Paradigm Invest $15 Million in Startup Behind Disappearing Blockchain

O(1) Labs previously raised a $3.5 million seed round in May 2018, followed by a $15 million Series A in April 2019 from leading investors including Polychain, Paradigm and Coinbase Ventures.

Related: Algorand’s New Europe Accelerator to Boost Startups With Up to $500K in Funding

“Mina presents a lightweight layer one blockchain solution to the cryptographic trilemma of decentralization, scale and security,” Three Arrows Capital co-founder Kyle Davis said in a statement. “As daily blockchain users ourselves, we are particularly excited to support the Mina team and ecosystem.”

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A New York law firm is trying to test blockchain projects’ decentralization claims against their perhaps not-quite-so-distributed realities.

Called the “Ketsal Open Standards” rubric, the toolkit, developed by the Ketsal law firm and revealed exclusively to CoinDesk, proposes using hard, measurable data points to either bolster or burst a blockchain’s decentralized credentials. 

It’s the latest contribution to a long-raging debate in crypto: when, and how, is something truly decentralized? 

Related: How the DeFi Craze Made Its Way to China

Finding that key, said toolkit co-creator and Ketsal partner Josh Garcia, can help investors, security researchers and even securities regulators root out blockchain projects’ sometimes bogus claims.

“It’s a tool to push along an informed discussion on what you’re talking about when you’re saying, ‘my network is decentralized.’”

“Now you can push back” with evidence the assertion is demonstrably false, he said.

Garcia and co-author Jenny Leung’s Open Standards is hardly the first decentralization measurement toolkit. But a review by CoinDesk shows it to be one of the most robust. 

Related: Diginex: An Early-Stage Cryptocurrency Exchange With High Aspirations

See also: To Get Serious About Decentralization, We Need to Measure It

Thirty-three data points probe the hard facts behind blockchain decentralization. Many are obvious. For example, the focus network’s node count – a decentralized network should have plenty – and its underlying code’s licensure status – open source or bust – are clear benchmarks.

But others appear to be more novel. Ketsal’s framework proposes weighing the network’s GitHub statistics, measuring inter-node communication times, determining how large a stake of the cryptocurrency rests in wallets (and with the big-investing whales) – and even the theoretical cost of mounting a 51% attack, among others. 

Compiling these statistics can help researchers better understand a blockchain’s in-the-moment distribution even if reaching an up-down verdict on its decentralization is impossible, said Garcia.

“It’s not an answer to the question, ‘What is decentralization,’ but it’s a way to find that answer,” he said. “If people can decide whether or not some of these metrics are valid,” they can use their chosen set to test for the type of decentralization they’re looking at.

Providing a broad selection of diverse metrics is critical, he said, because of the political, computational and economic analysts searching for a “decentralization” particular to them. A securities regulator concerned with the Howey Test would likely choose different data points than a security researcher probing the network for holes. 

Read more: Coinbase-Led Crypto Ratings Council Plans Transparency Boost as New Members Join

But different analysts also might hone in on similar points. For one, mining power concentration, or the concentration of miners whose computational efforts cryptographically secure proof-of-work blockchains, is a critical benchmark for any decentralization hawk.

If all the key miners are geographically concentrated or grouped into a single pool, a blockchain may face mounting centralization and security risks, according to Ketsal. Just four pools mined 58% of Bitcoin blocks in the past year, the rubric shows. 

Garcia said his team spent months compiling all the relevant data points from the world’s best-known blockchain network. Bitcoin’s resilience as well as the consensus agreement that it is decentralized make it an ideal case study, and Garcia said it’s the obvious benchmark to hold other projects against.

“If you do the same exact chart for another blockchain network, and you compare it side by side to Bitcoin … you know how far off you are from [decentralization]” he said. 

Read the Open Standards whitepaper and rubric:

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Bitcoin blew past $12,000 to its highest price in two months, bringing into view the prospect of a fresh 2020 high.

The largest cryptocurrency was changing hands Wednesday around $12,200, within striking distance of the year’s high around $12,500. And that was even before the news emerged that electronic consumer payments giant PayPal had been granted a conditional New York state license for a partnership to buy and sell cryptocurrencies. 

“Coupled with a seemingly constant flow of reports of traditional funds and companies investing or allocating some of their balance sheet to Bitcoin, we were due for a move up,” Matt Blom, head of sales and trading for the publicly traded digital-asset firm Diginex, told subscribers in his daily newsletter. 

Related: Nigeria Protests Show Bitcoin Adoption Is Not Coming: It’s Here

In traditional markets, European equity indexes were lower, U.S. stock futures fluctuated and 10-year Treasury yields rose on renewed speculation that lawmakers in Washington might still be moving toward a stimulus package. Gold rose 0.6% to $1,919 an ounce.

Market moves

While tether (USDT), with a market cap surpassing $16 billion, continues to hold the lion’s share of stablecoins in circulation, two smaller rivals are trouncing it in crypto’s hottest market this year, decentralized finance (DeFi).  

Measured by the total value locked in six of the most popular DeFi protocols – Compound, Maker, Uniswap, Curve, Aave and Balancer – USD coin (USDC) is in the lead among stablecoins followed by dai (DAI), the native stablecoin to MakerDAO. That’s according to data compiled by Flipside Crypto as of Oct. 19. 

USDC and DAI have market caps of $2.74 billion and $608 million, respectively. Yet, unlike on centralized exchanges, where tether is the go-to stablecoin in dollar-based crypto trades, USDC and DAI seem to have found their niche as the preferred stablecoins in decentralized trades.

Related: Bitcoin Hits Fresh 2020 High

In an interview with CoinDesk, Jeremy Allaire, peer-to-peer payments company Circle’s co-founder, attributed USDC’s success in DeFi to his company’s early efforts in building relationships with the DeFi communities. The fact the two companies that co-founded USDC’s governing Centre consortium, Circle and crypto exchange Coinbase, are both registered financial entities in the United States may also have something to do with USDC’s recent upturn. According to Allaire, USDC is preferred by institutional investors for being “safe, trusted and regulated.”

Authorities around the globe are giving more direction on how cryptocurrencies should be used and regulated. In late September, for instance, the U.S. Office of the Comptroller of the Currency (OCC) published its first regulatory guidance for stablecoins, clarifying that national banks can provide services to stablecoin issuers in the U.S. 

“Having guidelines creates more certainty, which makes mainstream market participants ready and willing to engage in it,” Allaire told CoinDesk.

– Muyao Shen

Read More: Tether Still Dominates Stablecoins, but USDC and Dai Are Winning DeFi

Bitcoin watch

Bitcoin’s price has jumped to two-month highs, and data from the options market shows traders are positioning for a continued rally. 

The top cryptocurrency by market value rose to $12,303 early today – the highest level since Aug. 18 – and was last seen trading near $12,250, representing a 2% gain on the day. 

The market sentiment has turned quite bullish, with firms like Square, Microstrategy and Stone Ridge disclosing their bitcoin holdings and bolstering the digital asset’s popularity as a store of value. 

“The momentum is certainly picking up with support from large corporations buying into the market,” Wayne Chen, CEO, and director of Interlapse Technologies, told CoinDesk in a LinkedIn chat. 

The move above $12,000 has exposed the August high of $12,476, above which significant resistance is seen directly at $13,880 (June 2019 high). 

Options market data shows investors are expecting a continued price rally. “Bitcoin is breaking out, and the options market is preparing for a bigger rally,” Skew’s CEO Emmanuel Goh told CoinDesk in a Telegram chat. 

The bullish mood is evident from the negative one-, three-, and six-month put-call skews, which measure the cost of puts relative to calls.

In other words, calls or bullish bets are drawing higher prices than puts or bearish bets – a sign of investors positioning for a price rally.

– Omkar Godbole

Token watch

Ether (ETH): Validators of Ethereum blockchain’s drop off of test network as more developers say they’re ready for first phase of 2.0 upgrade. 

Compound (COMP): DeFi lender’s governance token falls below $100 in sign that sector might be cooling. 

B​​​​​itcoin (BTC): In a case of the new economics, largest cryptocurrency’s demand should increase as price goes up, while supply stays fixed, Bloomberg Intelligence analyst Mike McGlone writes:

What’s hot

PayPal granted New York’s first “conditional BitLicense” to offer crypto services. (CoinDesk) 

Bahamas officially launches “sand dollar” central bank digital currency, first of its kind in the world to have been fully deployed. (CoinDesk) 

BitMEX exchange accelerates mandatory ID verification after charges of lax anti-money-laundering controls. (CoinDesk) 

Funding rates for bitcoin perpetual futures have stayed flat or turned negative as spot prices shot past $12K, suggesting futures traders aren’t as bullish in latest rally. (CoinDesk) 

U.S. demurral on digital dollar deprives officials of crucial “ability to rapidly and precisely disseminate stimulus funds directly to citizens during a recurring pandemic or lingering depression,” attorneys argue. (CoinDesk) 

Digital assets could become “the next realm of shadow banking.” (Roll Call)

In Q3, Binance’s spot trading hit an all time high a sign retail traders are prefering the exchange to its competitors. (The Block)

MicroStrategy CEO Michael Saylor says bitcoin markets data are “garbage” and that liquidity is far more limited than reported, based on his own experience; he says it’s tough to buy more than $35M of bitcoin “without people knowing.” (CoinDesk)

Mode Global, a London Stock Exchange-listed fintech company, plans to convert 10% of cash reserves into bitcoin “to protect investors’ assets from currency debasement.” (CoinDesk) 

Crypto-friendly Signature Bank raked In $4B in deposits in Q3 2020. (CoinDesk) 

Peer-to-peer bitcoin trading in North America now exceeds volumes during bull run of 2017. (Arcane Research)

Analogs The latest on the economy and traditional finance

As European Central Bank floods zone with stimulus, yields on 10-year government bonds from Greece, Italy are now under 1%, just like Germany’s. (WSJ) 

Commodities traders increasing bets that U.S. dollar will weaken versus euro. (WSJ) 

China initial stock offerings booming as economy recovers, markets surge. (WSJ)

Global trade recovered somewhat in third quarter but remains about 4.5% lower than a year earlier, United Nations report shows. (Reuters)

Japanese equities rise on U.S. stimulus deal being reached before Presidential elections. (Reuters) 

U.S. economy has lost 3.9M jobs since President Donald Trump took office. (Yahoo Finance) 

Tweet of the Day Related Stories

• Bitcoin Price Hits Two-Month High Above $12,300
• Tether Still Dominates Stablecoins, but USDC and Dai Are Winning DeFi

Bitcoin’s price reached a two-month high on Wednesday, taking month-to-date gain to over 13%.

• The top cryptocurrency by market value rose to a high of $12,379 soon before press time – the highest level since Aug. 18, according to CoinDesk’s Bitcoin Price Index.
• The rise represents a 3.5% gain on the day.
• Prices are now up over $2,000 from the lows near $10,000 seen in early September.

• “The bullish momentum is certainly picking up with support from large corporations buying into the market,” Wayne Chen, CEO, and director of Interlapse Technologies told CoinDesk in a LinkedIn chat. 
• Firms like Square, MicroStrategy, and Stone Ridge have recently disclosed bitcoin treasury investments, validating the cryptocurrency’s appeal as a store-of-value asset. 
• Options market data shows investors are expecting the price rally to continue.
• “Bitcoin is breaking out and the options market is preparing for a bigger rally,” Skew’s CEO Emmanuel Goh told CoinDesk in a Telegram chat.
• The bullish mood is evident from the negative one-, three-, and six-month put-call skews, which measure the cost of puts relative to that of calls.

• In other words, calls, or bullish bets, are drawing higher prices than puts, or bearish bets – a likely sign of investors positioning for a price rally.
• Notably, the one-month skew fell to -14% on Tuesday, the lowest level since Aug. 1, suggesting the most bullish mood in 2.5-months.
• Bitcoin’s immediate resistance is located at $12,476 (August high). A violation there would expose the June 2019 high of $13,800.

Also read: UK-Listed Firm Mode Putting up to 10% of Cash Reserves Into Bitcoin

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• Bitcoin Hits Fresh 2020 High
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• UK-Listed Firm Mode Putting Up to 10% of Cash Reserves Into Bitcoin

Crypto just got a shot at going mainstream in 2021. 

PayPal officially confirmed Wednesday it is entering the cryptocurrency market. The payments giant, with 346 million active accounts around the world, pledged to make cryptocurrency “a funding source for purchases at its 26 million merchants worldwide.”

What we know:

• PayPal said buy, sell and hold features would be live within the next few weeks but for some users, the features are already available.
• PayPal’s service does not allow bitcoin or other cryptocurrencies to be withdrawn or deposited. Once you buy the coins, they stay in your account until you sell.
• Initially, the service supports bitcoin (BTC), bitcoin cash (BCH), ether (ETH) and litecoin (LTC).
• This is a developing story; stay tuned for updates with full coverage below.

Bitcoin and other cryptocurrencies rallied following the announcement, which is one of several recent signs this year of mainstream corporate adoption of the decade-old technology, following MicroStrategy’s $425 million deployment of its cash surplus into bitcoin and a similar but more modest move by Square.

Related: Litecoin Surges After PayPal Includes It Among the Cryptos Customers Can Buy, Sell, Hold

CoinDesk first reported PayPal was planning a move into crypto in June, citing anonymous sources. A month later, CoinDesk reported the Paxos exchange had been selected to support PayPal in its crypto endeavors. 

In a blog post Wednesday, PayPal said the COVID-19 pandemic had driven the need for digital payments of all sorts, although the move had been in planning since at least late last year, and following PayPal’s short-lived dalliance with the Facebook-spawned Libra project.

Beginning in early 2021, PayPal customers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees, PayPal said. Its merchants will have no additional integrations or fees, as all transactions will be settled with fiat currency at their current PayPal rates. 

“In effect, cryptocurrency simply becomes another funding source inside the PayPal digital wallet, adding enhanced utility to cryptocurrency holders, while addressing previous concerns surrounding volatility, cost and speed of cryptocurrency-based transactions,” PayPal said.

Not your keys…

Related: PayPal Adds Bitcoin: Most Bullish News of the Year?

As bullish for the bitcoin market as this announcement has proven to be, an initial review of PayPal’s crypto services terms underscores that a go-it-slow mindset still pervades. Critical caps limit who buyers are, how much they can buy and what they can actually do with their PayPal-sourced crypto.

For starters, PayPal is refusing to hand over customers’ keys.

“You own the Cryptocurrency you buy on PayPal but will not be provided with a private key,” PayPal wrote in a help post. PayPal casts the restriction as a loss-prevention tactic.

A customer losing private keys makes his or her underlying crypto pretty much gone for good, the post points out. While users will not be liable for “unauthorized” crypto transactions on their account (think: hacks), PayPal appears to have no interest in mitigating sloppy private key management.

But keeping keys away from customers ensures PayPal can maintain a tighter grip on how customers wield BTC, BCH, LTC and ETH.

Crucially, users will not be allowed to send their crypto around. 

“You can only hold the Cryptocurrency that you buy on PayPal in your account. Additionally, the Cryptocurrency in your account cannot be transferred to other accounts on or off PayPal,” the help page says. 

This prompted the inevitable Eagles “Hotel California” song reference (“You can check out anytime you like/but you can never leave”) on crypto Twitter:

The service rollout also faces a series of real-world restrictions. Only 49 out of 50 U.S. states have coverage at launch, with Hawaii, a notoriously tricky state for crypto companies, excluded from the list.

“We plan to expand this service to select global markets in the first half of 2021,” PayPal said.

There’s also a $10,000 weekly buying cap and a $50,000 limit per 12-month period. All trades must be executed in U.S. dollars, PayPal said.

PayPal gets BitLicense

As part of Wednesday’s formalities, the New York State Department of Financial Services (DFS), said it had granted the first “conditional BitLicense” to PayPal for a partnership with Paxos Trust Company, enabling customers to buy and sell cryptocurrencies.

DFS said it was making good on a promise last year from Superintendent of Financial Services Linda A. Lacewell to take a fresh look at its regulatory framework for virtual currencies, with a view to fostering innovation in New York State.

“DFS’s approval today follows our June 2020 announcement for a new framework for a conditional Bitlicense to encourage, promote and assist interested institutions to have a well-regulated way to access the New York virtual currency marketplace in a way that is both timely and protective of New York consumers, through partnerships with New York authorized virtual currency firms,” said Lacewell in a statement.

“DFS will continue to encourage and support financial service providers to operate, grow, remain and expand in New York and work with innovators to enable them to  germinate and test their ideas, for a dynamic and forward-looking financial services sector, especially as we work to build New York back better in the midst of this pandemic,” she said.

Now, with the DFS’s approval, New York State-chartered Paxos will be able to provide trading and custodial services to PayPal to allow the fintech giant’s 346 million customers to buy, sell and hold bitcoin, bitcoin cash, ether and litecoin, according to the DFS statement. 

Since 2015, DFS has approved 26 entities to engage in virtual currency business in New York State, including PayPal. 

Read more: PayPal Picks Paxos to Supply Crypto for New Service, Sources Say

Update (Oct. 20, 15:08 UTC): Added details to introductory paragraphs and a section detailing the strict limitations on what PayPal users can do with their crypto.

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Crypto just got a shot at going mainstream in 2021. 

PayPal officially confirmed Wednesday it is entering the cryptocurrency market. The payments giant, with 346 million active accounts around the world, pledged to make cryptocurrency “a funding source for purchases at its 26 million merchants worldwide.”

What we know:

• PayPal said buy, sell and hold features would be live within the next few weeks but for some users, the features are already available.
• PayPal’s implementation does not allow bitcoin or other cryptocurrencies to be withdrawn. Once you buy or deposit, the service is your crypto “bank” until you sell.
• Initially, the service supports bitcoin (BTC), either (ETH), bitcoin cash (BCH) and litecoin (LTC).
• This is a developing story; stay tuned for updates with full coverage below.

CoinDesk first reported PayPal was planning a move into crypto in June of this year, citing anonymous sources. A month later, CoinDesk reported the Paxos exchange had been selected to support PayPal in its crypto endeavors. 

Related: Bitcoin Hits Fresh 2020 High

In a blog post Wednesday, PayPal said the need for digital payments of all sorts had been driven by the COVID-19 pandemic, although the move had been in planning since at least late last year, and following PayPal’s short-lived dalliance with the Facebook-spawned libra project.

Beginning in early 2021, PayPal customers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees, PayPal said. Its merchants will have no additional integrations or fees, as all transactions will be settled with fiat currency at their current PayPal rates. 

“In effect, cryptocurrency simply becomes another funding source inside the PayPal digital wallet, adding enhanced utility to cryptocurrency holders, while addressing previous concerns surrounding volatility, cost and speed of cryptocurrency-based transactions,” said the blog.

PayPal gets BitLicense

As part of Wednesday’s formalities, the New York State Department of Financial Services (DFS), said it had granted the first “conditional BitLicense” to PayPal for a partnership with Paxos Trust Company, enabling customers to buy and sell cryptocurrencies.

Related: Ex-Coinbase, BitFlyer Lawyer Joins Anderson Kill

DFS said it was making good on a promise last year from Superintendent of Financial Services Linda A. Lacewell to take a fresh look at its regulatory framework for virtual currencies, with a view to fostering innovation in New York State.

“DFS’s approval today follows our June 2020 announcement for a new framework for a conditional Bitlicense to encourage, promote and assist interested institutions to have a well-regulated way to access the New York virtual currency marketplace in a way that is both timely and protective of New York consumers, through partnerships with New York authorized virtual currency firms,” said Lacewell in a statement.

“DFS will continue to encourage and support financial service providers to operate, grow, remain and expand in New York and work with innovators to enable them to  germinate and test their ideas, for a dynamic and forward-looking financial services sector, especially as we work to build New York back better in the midst of this pandemic,” she said.

Now, with the DFS’s approval, New York State-chartered Paxos will be able to provide trading and custodial services to PayPal to allow the fintech giant’s 346 million customers to buy, sell and hold cryptocurrency. Four DFS-approved digital assets will be initially available: bitcoin, bitcoin cash, ether and litecoin, according to the DFS statement. 

Since 2015, DFS has approved 26 entities to engage in virtual currency business in New York State, including Wednesday’s announcement. 

Read more: PayPal Picks Paxos to Supply Crypto for New Service, Sources Say

Update (Oct. 20, 13:52 UTC): Added new information and context to introductory paragraphs.

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Polymarket, a decentralized information marketplace, has closed a $4 million funding round led by Polychain Capital. 

Announced on Monday, the round was joined by some of the industry’s most well-known advocates and investors such as former AngelList CEO Naval Ravikant, former Coinbase CTO Balaji Srinivasan, CoinShares CSO Meltem Demirors among others.

The startup said the investment will help it move to stage 2 of its beta release, which will remove technical complexities and make it easier for mainstream users to onboard and trade on the platform.

Related: Fiat-to-Crypto Gateway BTC Direct Raises Almost $13M in Series A Funding

Polymarket is designed to let users place cryptocurrency bets on hotly debated topics, ranging from politics and health through to business and science.

The platform’s trading activity is turned into actionable insights and can also help hold to account those pumping disinformation in the news cycle, according to the announcement.

In essence, Polymarket allows those with an “educated opinion” to profit from correct statements and aggregates the data into what the company calls a “collective knowledge.”

Platform users can cross-check market activity against current news to better determine the truth of a given subject or statement, Polymarket said.

Related: Investors Flock to India’s DeFi Scene Months After Central Bank Ban Overturned

“One of the biggest problems with social media and discourse on the internet today is the lack of accountability,” Polymarket founder Shayne Coplan said. “Everyone has an opinion and isn’t afraid to share it.”

“At the moment there’s little downside to being wrong; this makes it really hard for regular people to discern what’s fact and what’s fiction,” Coplan added. “2020 has showcased just how bad the consequences of this can be.”

In the three months since its beta launch, Polymarket is said to have seen over $1 million in trading volume.

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

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While tether (USDT), with a market cap surpassing $16 billion, continues to hold the lion’s share of stablecoins in circulation, two smaller rivals are trouncing it in crypto’s hottest market this year, decentralized finance (DeFi).  

Measured by the total value locked in six of the most popular DeFi protocols – Compound, Maker, Uniswap, Curve, Aave and Balancer – USD coin (USDC) is in the lead among stablecoins followed by dai (DAI), the native stablecoin to MakerDAO. That’s according to data compiled by Flipside Crypto as of Oct. 19. 

USDC and DAI have market caps of $2.74 billion and $608 million, respectively. Yet, unlike on centralized exchanges, where tether is the go-to stablecoin in dollar-based crypto trades, USDC and DAI seem to have found their niche as the preferred stablecoins in decentralized trades.

Related: With COMP Below $100, a Look Back at the ‘DeFi Summer’ It Sparked

In an interview with CoinDesk, Jeremy Allaire, peer-to-peer payments company Circle’s co-founder, attributed USDC’s success in DeFi to his company’s early efforts in building relationships with the DeFi communities. The fact the two companies that co-founded USDC’s governing Centre consortium, Circle and crypto exchange Coinbase, are both registered financial entities in the United States may also have something to do with USDC’s recent upturn. According to Allaire, USDC is preferred by institutional investors for being “safe, trusted and regulated.”

Read more: Total Stablecoin Supply Nearly Doubled in Q3, Adding Record $8B

Authorities around the globe are giving more direction on how cryptocurrencies should be used and regulated. In late September, for instance, the U.S. Office of the Comptroller of the Currency (OCC) published its first regulatory guidance for stablecoins, clarifying that national banks can provide services to stablecoin issuers in the U.S. 

“Having guidelines creates more certainty, which makes mainstream market participants ready and willing to engage in it,” Allaire told CoinDesk.

Related: Uniswap’s First Governance Vote Ends in Ironic Failure

In contrast to USDC, dai is a decentralized stablecoin that in theory does not have a centralized issuer and is censorship-resistant. Niklas Kunkel, the head of backend services at MakerDAO, told CoinDesk DAI’s decentralization core has made it more popular than most of its competitors. He sees its decentralization as a good thing for regulators. 

“One advantage you have from a decentralized stablecoin is that everything is completely transparent,” Kunkel told CoinDesk in an interview. “So from a regulatory point of view, this is almost like their dream scenario, right? Because they can see exactly how many dai are in existence and in circulation and they can see in real time.”

“Dai is not the antithesis to regulation and regulator,” he added. “If anything, it’s the opposite.”

For stablecoin king tether, more than a few market participants question whether it is as transparent as the company claims. Tether the company has been battling multiple lawsuits accusing it of not properly backing its currency with collateralized reserves. Tether has declined to answer CoinDesk’s questions on the lawsuits. However, in an email, Chief Technology Officer Paolo Ardoino called tether “the most stable and liquid stablecoin.”

That assertion is challenged by at least some of its competitors. 

Read more: ‘No Other Option but More Collateral’: The Short- (and Long-) Term Fixes for Dai’s Broken Peg

“Tether is not fully backed with dollars and there is very little transparency into their reserves,” the head of strategy at Paxos, Walter Hessert, wrote in an email response to CoinDesk. “That’s ok for some crypto traders because there are very liquid markets today. However, mainstream investors and institutions prefer stablecoins they can trust.”

According to Tether’s website, its USDT stablecoin is backed by cash and equivalents “and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.” 

Paxos’ stable of stablecoins, including Paxos standard token (PAX), Binance USD (BUSD) and Huobi (HUSD), are all approved by regulators and are fully backed on a one-to-one basis with U.S. dollars, according to Hessert.

Tether’s first-mover advantage may have been the leading reason for its overall dominance, but even in Asia, which has historically driven demand in USDT, traders are beginning to turn to other stablecoins for liquidity.

“We have seen a lot of guys in Asia are starting to trade more BUSD and USDC instead of tether,” Darius Sit, co-founder of Singapore-based crypto trading firm QCP Capital, told CoinDesk in an interview. “USDC is more fungible, meaning that it can be exchanged one to one anytime. The spread is tighter.”

The total stablecoin supply in the third quarter nearly doubled from the second quarter, and the total market capitalization of stablecoins has also breached $20 billion at press time, according to data from CoinGecko. That’s still relatively smaller than what’s found in traditional finance, a fact giving optimism to many in the stablecoin business hoping to overtake tether. 

“When you think about the size of dollar money markets, it’s like four trillion” dollars, Allaire said. “So clearly, tokenized dollars that are used in a really wide variety of applications should be eventually [worth] hundreds of billions or even trillions of dollars.”

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The Central Bank of the Bahamas has officially launched its national digital currency.

The first of its kind in the world to have been fully deployed, the sand dollar is a digital version of the Bahamian dollar.

Issued by the country’s monetary authority as a central bank digital currency (CBDC), the announcement of the launch came via a tweet on Wednesday.

Related: The US Risks Getting Left Behind on CBDCs

The project is designed to bring more “inclusive access to regulated payments and other financial services,” per the central bank’s FAQ.

CBDCs have been a hot topic this year; China, for instance, appears to be close to launching its digital yuan, which in recent days has seen its biggest public trial. Others, like the U.S., Russia and the EU are looking into their respective CBDC launches.

As reported by CoinDesk, the first phase of the Bahamas roll-out sees private-sector players such as banks and credit unions readying compliance checks for personal and enterprise wallets to support the sand dollar.

The digital wallets will be secured with multi-factor-authentication security and will be mobile-based, servicing the 90% of the population with smartphones.

Related: CBDCs Mean Evolution, Not Revolution

Underserved communities of the Caribbean nation are the primary target for the initiative, which the bank said would reduce financial service delivery costs and boost transactional efficiency. The country is an archipelago with hundreds of islands, placing limits on traditional infrastructure.

The Sand Dollar is backed 1:1 to the Bahamian dollar (BSD), which, in turn, is pegged to the U.S. dollar.

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Mode Global Holdings PLC, a London Stock Exchange-listed company, has announced plans to make a “significant purchase” of bitcoin as part of its treasury investment strategy.

• In a press release on Wednesday, the fintech group said it will convert up to 10% of its cash reserves into the cryptocurrency as part of a long-term strategy to “protect investors’ assets from currency debasement.”
• With interest rates in the U.K. at a record low of 0.1%, Mode said it would also seek to diversify away from low-interest money market instruments to maximize the value of returns from its recent initial public offering.  
• “Faced with the challenges of COVID-19 and with U.K. interest rates at the lowest level in the Bank of England’s 326-year history, our confidence in the long-term value of bitcoin has only increased,” said Jonathan Rowland, Mode’s executive chairman.
• “Today’s allocation is executed through a modern, forward-looking but prudent treasury management strategy,” he added.
• With the news, the company follows MicroStrategy and Jack Dorsey’s Square in deciding to place a portion of their treasury reserves into bitcoin.
• MicroStrategy put $425 million into bitcoin, according to a series of disclosures, while Square invested $50 million.
• Mode said it recognized the potential of bitcoin as “a reliable store of value and an attractive investment due to the asset’s asymmetric risk/reward attributes and safe haven status.”
• The firm did not disclose a cash value of the bitcoin allocation.

Read more: MicroStrategy Buys $175M More in Bitcoin, Upping BTC Holdings to $425M

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Mode Global Holdings PLC, a London Stock Exchange-listed company, has announced plans to make a “significant purchase” of bitcoin as part of its treasury investment strategy.

• In a press release on Wednesday, the fintech group said it will convert up to 10% of its cash reserves into the cryptocurrency as part of a long-term strategy to “protect investors’ assets from currency debasement.”
• With interest rates in the U.K. at a record low of 0.1%, Mode said it would also seek to diversify away from low-interest money market instruments to maximize the value of returns from its recent IPO.  
• “Faced with the challenges of COVID and with UK interest rates at the lowest level in the Bank of England’s 326-year history, our confidence in the long-term value of Bitcoin has only increased,” said Jonathan Rowland, Mode’s executive chairman.
• “Today’s allocation is executed through a modern, forward-looking but prudent treasury management strategy,” he added.
• With the news, the company follows Microstrategy and Jack Dorsey’s Square in deciding to place a portion of their treasury reserves into bitcoin.
• MicroStrategy put $425 million into bitcoin, according to a series of disclosures, while Square invested $50 million.
• Mode said it recognized the potential of Bitcoin as “a reliable store of value and an attractive investment due to the asset’s asymmetric risk/reward attributes and safe haven status.”
• The firm did not disclose a cash value of the bitcoin allocation.

Also read: MicroStrategy Buys $175M More in Bitcoin, Upping BTC Holdings to $425M

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Cryptocurrency traders showed significantly less enthusiasm as bitcoin traded at $12,000 Tuesday compared to when bitcoin reached the same level nearly two months ago, based on futures funding rates from multiple exchanges.

• When bitcoin traded near $12,000 throughout August, finally reaching the key level mid-month, funding rates for perpetual futures turned acutely positive across leading derivative exchanges, reflecting the market’s bullishness.
• As bitcoin revisited $12,000 Tuesday, however, funding rates reacted differently, staying flat or turning negative, indicating a lack of the same bullishness two months ago.
• A mechanism unique to perpetual futures contracts, funding rates are set by the market and vary over time as traders put on and take off positions. When the market is bullish, funding rates turn positive, and traders taking long positions pay short sellers. When the market is bearish, funding turns negative, and short sellers pay.
• Funding rates across Binance, Bitfinex, BitMEX, and Deribit futures markets started turning negative Saturday and Sunday as bitcoin started trading above the low $11,000 levels, according to data aggregated by Glassnode. As bitcoin tapped $12,000 Tuesday, rates stayed negative or went flat.

• A string of negative news over the past few weeks may be to blame for the markets less-than-bullish sentiment, according to Aditya Das, cryptocurrency market analyst at Brave New Coin, who said he thinks some traders may have been “spooked” and closed their long positions or put on shorts.
• Funding on FTX and Huobi similarly stayed negative throughout the week’s entire opening rally, according to data aggregated by Skew.
• Futures traders on OKEx, the largest derivatives exchange by open interest, in fact became increasingly bearish Tuesday amid bitcoin’s rally. The exchange’s ratio of long to short positions steadily dropped from 0.79 at Tuesday’s open to 0.67 at last check, as short sellers outnumbered bitcoin bulls.
• Despite the lack of bullishness from futures traders, traditional market asset allocators and crypto-market investors are still actively “redenominating” into bitcoin, according to Kyle Davies, co-founder of Three Arrows Capital, continuing what he calls “the story of Q3 2020.”
• Davies told CoinDesk, “We generally see this kind of spot-led move precipitate a period of speculation.”

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BitMEX, which has been charged by the U.S. government and a regulator with facilitating unregistered trading, has accelerated its mandate for all customers to verify their identities by Nov. 5, three months earlier than its original deadline of early February.

Stronger identity verification requirements is an industry trend, said Ben Radclyffe, commercial director of the exchange’s parent company 100x Group, in an interview with CoinDesk. BitMEX’s decision to move the deadline from February 2021 to November 2020 follows this trend and internal plans the exchange has worked on for “over a year with a considerable amount of resources dedicated to this.”

In August, the famously freewheeling bitcoin derivatives exchange announced mandatory identity verification. Less than two months later, charges were filed against the exchange by the U.S. Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) and as a result nearly 30% of its bitcoin balance were withdrawn by clients.

Related: ‘Garbage’ Market Data Is Holding Bitcoin Back: MicroStrategy CEO

Under the accelerated timeline, by 0:00 UTC on Nov. 5, all BitMEX traders and affiliates identities must be verified before increasing or opening new positions. By Dec. 4., all accounts must be verified in order to process withdrawals from the exchange. After Dec. 4, BitMEX will begin to close unverified accounts, Radclyffe told CoinDesk.

“Well over 50% of BitMEX’s current trading volume comes from verified accounts,” said Radclyffe, representing the trading activity of tens of thousands of accounts.

“The industry’s KYC-free are coming to a close,” said 100x’s chief compliance officer, Malcolm Wright. BitMEX’s accelerated identity verification deadline along with other corporate initiatives, including an internal anti-money laundering working group, are efforts by 100x, according to Wright, to become an industry leader in identity verification initiatives.

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