Malta’s financial watchdog has received letters of intent from 21 crypto exchanges to be licensed under the Virtual Financial Assets Act.
The Malta Financial Services Authority (MFSA) has received queries from 21 cryptocurrency exchanges seeking licensure under the Virtual Financial Assets (VFA) Act.
21 firms out of 34 potential VFA providers are crypto exchanges
According to an official announcement on Nov. 1, the 21 exchanges are among the 34 prospective VFA service providers that sent their letters of intent to the Maltese financial regulator in order to acquire a VFA Services Licence.
The MFSA clarified that, until Oct. 31, crypto providers have been operating under the transitory provisions specified in Article 62 of the VFA Act. In order to continue their operations in or from Malta, those firms will be now required to apply for authorization with the MFSA.
VFA license applicants to fall under one of four categories
According to a report by Finance Magnates, applicants will be classified at the discretion of the MFSA into one of four categories that define the requirements of license holders. The regulator is also planning to enforce administrative penalties for compliance violations, the report states.
In the official announcement, the MFSA said that it will soon be contacting the applicants to schedule a preliminary meeting. Once the meeting is held, applicants will have 60 days to submit a full application back to the authority.
18 VFA agents registered so far
According to the announcement, the MFSA has received 30 applications for registration of VFA Agents, with 18 of them having been registered. The list of the registered agents is available on the MFSA website.
The VFA Act is part of Malta’s blockchain-related legislation adopted in July 2018 alongside the Malta Digital Innovation Authority Act and the Innovative Technological Arrangement and Services Act. In September, the MFSA published its strategic plan claiming that it will actively monitor and manage business-related risks related to cryptocurrency firms.
Yesterday, the regulator warned of a new Bitcoin (BTC) scam scheme dubbed “Bitcoin Future,” noting that it shares the same features as a previously identified fraudulent entity called “Bitcoin Revolution.”
Monero (XMR) futures trading launched by a regulated Dubai-based BTSE cryptocurrency exchange that says it wants to “spark a conversation.”
Dubai-based multi-currency and spot/futures exchange, BTSE, unveiled its Monero (XMR) futures trading, Oct. 31. The move makes it one of the first and only exchanges offering futures contracts on the privacy-focussed cryptocurrency.
Bucking the trend of exchanges delisting privacy-focused coins
BTSE is a relatively unknown, low-volume exchange that is licensed by the Department of Economic Development, Government of Dubai and is under the regulations of the Central Bank of United Arab Emirates, according to its website.
The decision to list Monero comes at a time when the popular privacy coin is being delisted from several other exchanges. Despite having proved its longevity, its focus on anonymity entails potential regulatory risk.
Blockchain analysis firms such as CipherTrace, for example, are working with regulators and law-enforcement agencies to track an increasing number of cryptocurrencies, though privacy-focused Monero and Zcash are notably absent from the list of monitored tokens.
How to list privacy coins in a regulatorily-compliant fashion
But CEO of BTSE, Jonathan Leong, believes that privacy is an important aspect of a strong digital currency, and that listing Monero can provide authorities with a yardstick by which to assess best practices for listing such tokens.
“In listing Monero, we hope not only to provide our users with more choice when it comes to their trading needs, but to spark a conversation on how to list privacy coins in a regulatorily-compliant fashion.”
As Cointelegraph recently reported, cryptocurrency futures trading is rapidly catching up to spot trading in terms of volume.
Futures trading volumes creep up on spot trading in crypto, with futures now amounting to half of the value of more traditional buy-sell trades.
Crypto futures trading volume now reportedly amounts to nearly 50% of the value of spot trading on crypto markets, according to Bloomberg.
13 exchanges analyzed
Citing volume data from 13 major global crypto exchanges, Bloomberg reported on a massive growth of cryptocurrency futures markets Oct. 31.
The analyzed exchanges include institutional digital asset platform Bakkt, the Chicago Mercantile Exchange Group (CME), Binance, Bitfinex, the Huobi Derivative Market (DM), Kraken, FTX, Bitz, Deribit, CoinFlex, Bybit, OKEx and BitMEX.
First ever Bitcoin futures launched in late 2017
Spot trading is simply buying or selling a commodity or, in this case, a crypto asset at the moment of the trade. Prior to the launch of the first Bitcoin (BTC) futures platform back in 2017, spot trading was the principal option available for crypto trades. The Chicago Board Options Exchange (CBOE) launched the first trading of BTC-based futures contracts on Dec. 11, 2017, just a week before the launch of a similar product by the Chicago Mercantile Exchange (CME).
The Bloomberg report follows a new Bitcoin futures volumes record on major digital asset platform Bakkt, which launched its service on Sept. 22. On Oct. 26, Bakkt traded 1,183 Bitcoin futures contracts worth of $11 million after hitting a previous all time record of 441 Bitcoin futures on Oct. 23.
On Oct. 29, OKEx, the world’s 5th-largest crypto exchange by trading volume, announced plans to start trading Tether (USDT) futures.
Russia is one of the top 10 markets on Binance exchange, CEO Changpeng Zhao revealed as the platform just added support for ruble trading.
Major global crypto exchange Binance has silently launched Russian ruble trading on Oct. 30.
Binance Ruble trading goes live according to the plan
Less than two weeks after announcing Binance’s plans to launch fiat trading starting with Russian ruble, Binance CEO Changpeng Zhao (CZ) revealed that ruble trading is live in a tweet on Oct. 31.
CZ noted that the launch of Russian ruble was released silently and in conjunction with his interview on Coindesk stating that Russia is one of the biggest markets of Binance exchange.
CZ first announced the ruble trading launch speaking at a Russian government-sponsored event, the Open Innovations Forum in Moscow on Oct. 21. At the time, Binance said that the exchange was expecting the launch in about two weeks.
Russia is among the top 10 markets on Binance
In another interview with Russian-language crypto news outlet Forklog on Oct. 31, Binance CEO revealed that Russia is one of the top-ten markets on Binance. When asked about the number of Russia-based users, CZ suggested that the amount is significant, saying:
“Russia is in the TOP-10 for sure. Our user base is very similar to the geographical distribution of Bitcoin holders.”
According to a recent Forklog survey, Binance is the most popular cryptocurrency exchange in Russia, Ukraine and Belarus, with nearly 60% of the respondents claiming that they prefer Binance rather than other global crypto exchanges.
When asked what could be a trigger for such a level of popularity in these regions, CZ said that Binance is just trying to meet the demand by adapting their products to the local language.
Binance’s introduction of Russian ruble trading comes amid a report that Russia’s internet ombudsman is planning to launch a new Bitcoin (BTC) mining facility to mine 20% of the global Bitcoin.
Meanwhile, the cryptocurrency industry is not formally regulated in the country, as recently reported. On Oct. 22, Zhao expressed his confidence that the bill on regulating digital currencies in the Russian Federation will be adopted in the foreseeable future.
Binance’s U.S. platform, Binance.US, will add support for two new tokens to its platform: NEO and ATOM.
The United States-focused wing of leading cryptocurrency exchange Binance will add support for Neo (NEO) and Cosmos (ATOM).
Binance.US announced on Oct. 30 that it will add full trading support for the two tokens on Oct. 31, both of which are among the top-20 tokens by market capitalization according to Coin360.
Per the announcement, users can already start depositing funds before trading commences at 9:00 p.m. EST tomorrow.
Cosmos provides a blockchain-based platform that works as a mediator between different blockchains. It launched its first ecosystem hub in March 2019 after raising $17.3 million in its token sale in April 2017.
Neo is a decentralized open-source blockchain application platform. In September, Neo became the first blockchain member of Microsoft’s open-source project, the .NET Foundation.
At press time, NEO is up by 4.32% to trade at $10.87, while ATOM is trading sideways, down 0.23% to trade at $3.10.
Binance lists SEC-compliant token for $250,000 “long-term payment”
Earlier this week, Binance’s main platform listed Blockstack’s STX token when the firm paid Binance a $250,000 “long-term payment” to ensure that the token remains listed on the platform. A filing with the United States Securities and Exchange Commission (SEC) from Blockstack reveals that Binance received 833,333 STX, which at the $0.30 token valuation provided by the company is equivalent to $250,000.
Binance states that it did not charge a listing fee to Blockstack and that the marketing payment was Blockstacks’ initiative.
STX’s listing on Binance follows a $23 million token sale that was approved by the SEC under Regulation A+. An A+ funding round is a type of initial public offering for startups in need of early funding in which members of the public can participate.
A look at the history of the mysterious firm Crypto Capital and its ties to Bitfinex as court cases brew.
Over the past week, news broke detailing that Oz Yosef, an executive of the mysterious firm Crypto Capital, has been indicted by the United States for conspiracy to commit bank fraud and conspiracy to operate an unlicensed money transfer service.
The news came just days after Crypto Capital’s president, Ivan Manuel Molina Lee, was arrested by Polish authorities on suspicion of laundering roughly $350 million worth of funds from illegal proceeds and having ties to a transnational drug cartel. According to local reports, the arrested was tied to $350 million worth of funds previously seized by the Polish Ministry of Justice from Crypto Capital’s Polish subsidiary, Crypto Sp. z. oo.
Crypto Capital is a Panama-based firm that the U.S. Department of Justice claims provided shadow banking services to several cryptocurrency exchanges, including Bitfinex, Binance, Cex.io, Coinapult and QuadrigaCX.
On Oct. 25, Stuart Hoegner, general counsel to Bitfinex, issued a statement responding to Lee’s arrest asserting that Bitfinex was the victim of fraud perpetrated by Crypto Capital. The statement also rejected accusations that proceeds from narcotics allegedly laundered by Crypto Capital were associated with the exchange.
Relations deteriorate between Bitfinex and Crypto Capital
Crypto Capital’s partnership with Bitfinex has garnered significant scrutiny in recent months, with the exchange claiming that the liquidity issues had been triggered by an inability to access $880 million worth of its funds that were being held by Crypto Capital.
Last week, Bitfinex filed with a California court to subpoena the former vice president of TCA Bancorp, Rondell Clyde Monroe, with the exchange asserting that Monroe held information relating to its funds held by Crypto Capital.
Bitfinex claims that its partnership with Crypto Capital began to deteriorate in April of last year, following reports indicating that Polish authorities had seized roughly $350 million from an account belonging to Crypto Capital subsidiary Crypto Sp. z. oo. with Bank Spółdzielczy w Skierniewicach.
Bitfinex subpoenas Crypto Capital representative
In the subpoena, Bitfinex alleged that TCA Bancorp provided banking services to Crypto Capital, asserting that the firm had “used one or more accounts held at TCA Bancorp to facilitate the transfer of funds.”
Bitfinex holds that in August 2018, Crypto Capital informed the exchange that approximately $500 million of Bitfinex’s funds were being “held up” by authorities in Poland and Portugal. When pressed to provide evidence of the frozen funds, Bitfinex was issued a reference letter signed by Monroe stating that more than $300 million worth of Bitfinex’s funds were being held with TCA Bancorp by Global Trade Solutions AG, operating as Crypto Capital.
The filing requested the court for permission to accept Monroe’s deposition testimony. Bitfinex believes that Monroe possesses key information relating to the funds that were in the custody of Crypto Capital, with the exchange also seeking to obtain communications between Monroe and Crypto Capital.
Additionally, Bitfinex sought documentation of Monroe’s communications with Yosef and his sister Ravid Yosef, as well as Global Trade Solutions shareholder Reginald Fowler and his son Trent Fowler. Both Reginald Fowler and Ravid Yosef have been indicted by the Department of Justice for alleged bank fraud relating to a cryptocurrency exchange intermediary.
Bitfinex is also the subject of an ongoing investigation by the New York State Office of the Attorney General for failing to disclose that it was unable to access the $880 million in funds and that it had used a loan from sister company Tether to both continue operating and conceal the losses.
Crypto Capital’s past
Crypto Capital has been in operation since 2013, with Braveno’s Mathias Grønnebæk claiming that Reddit user u/bitfan2013 was the firm’s founder. In May 2013, u/bitfan2013 posted to the r/Bitcoin subreddit, probing the community sentiment regarding a proposed bank that would comprise a means to convert between BTC and fiat currency, in addition to providing services to companies operating in the crypto sector.
The poster asserted that his family and he sat on the board of directors for four “small – medium sized private banks” in Panama. The following week, u/bitfan2013 announced that they had decided to “offer private international banking to bitcoin customers, merchants and traders.”
In June 2013, Crypto Capital (then operating under the name Crypto Financial) launched, and then conducted what it called an initial public offering to raise 30,000 BTC through Panama-based Havelock Investments in August 2013. By 2015, Crypto Capital had attracted several notable exchanges as clients, providing services to Bitfinex and Coinapult, among others.
Bitfinex depended on Crypto Capital amid banking difficulties
Bitfinex’s affiliation with Crypto Capital became the subject of scrutiny in 2017, with the exchange directing its customers to deposit funds to accounts held by Crypto Capital subsidiaries following the Wells Fargo termination of banking services to Bitfinex via its Taiwanese partners in March 2017.
Stuart Hoegner, general counsel for Bitfinex and Tether, stated that the exchange expanded the number of accounts held with Crypto Capital throughout 2017 and 2018, as the platform became increasingly reliant on Crypto Capital for the processing of fiat services.
During November 2017, Bitfinex began directing customers to deposit funds into Crypto Sp. z. oo.’s account with Bank Spółdzielczy w Skierniewicach in Poland. The director of both Crypto Capital and Crypto Sp. z. oo. is Ivan Manuel Molina Lee, a Panamanian who appears to have acted as a nominee director for many Panama-based companies.
Crypto Capital accounts seized in April 2018
In April 2018, Polish authorities seized $371 million from an account held by Crypto Sp. z. oo. with Bank Spółdzielczy w Skierniewicach in Poland for alleged ties to Colombian cartel operations.
At the time, an individual posting on the Bitcoin.pl forum claimed to have been questioned by Polish police “regarding the case of Crypto Sp. z. oo.” as a result of having previously received funds from Bitfinex via the intermediary.
Bitfinex denied the alleged ties to the accounts seized and claimed that its operations were “unaffected” by the events. Crypto Capital accounts that had been operated on behalf of the now-defunct website Backpage were also seized in a sex-trafficing bust by authorities in April 2018.
Crypto Capital rebrands to Global Trade Solutions
After partnering with ING, Bitfinex recommenced directing customers to deposit fiat using accounts held by Crypto Capital subsidiaries, including the Swiss-based Global Trade Solutions via Portuguese bank Caixa Geral de Depositos in February 2018.
By the third quarter of 2018, accounts held by Global Trade Solutions were used to facilitate fiat transactions for Bitfinex via multiple U.S. banks, including Citibank, HSBC and Enterprise Bank & Trust.
In June 2018, Crypto Capital dissolved and liquidated itself, and has since been operated by Global Trade Solutions. Amid the restructuring, it became apparent that Crypto Capital had purchased a software engineering firm that was founded in 2001, which is presumed to be the basis for the “2001” branded on Global Trade Solutions’ logo featured on its website.
Tensions rise between Bitfinex and Crypto Capital
In chat logs documenting communications between Bitfinex executive “Merlin” and Crypto Capital’s “Oz” that were provided to the New York State Office of the Attorney General for its investigations, Bitfinex appears to have desperately sought to access its funds held by Crypto Capital from August 2018 onward.
On Aug. 15, 2018, Merlin stated: “Hey Oz, sorry to bother you every day, is there any way to move at least 100M […] ? We are seeing massive withdrawals and we are not able to face them anymore unless we can transfer some money out of Cryptocapital.”
On Oct. 15, 2018, Merlin pleaded with Crypto Capital to provide Bitfinex with funds, warning that “too many withdrawals” were “waiting for a long time,” and that a failure to respond “could be extremely dangerous for […] the entire crypto community,” adding, “BTC could tank to below 1k if we don’t act quickly.”
On Oct. 17, Merlin stated that Bitfinex “urgently” needed $100 million in “either Tethers or USD” within one week. The next day, Merlin told Crypto Capital: “Too much money is trapped with you and we are currently walking on a very thin crust of ice.”
Bitfinex among several parties affected
Crypto Capital’s fallout affected a number of cryptocurrency exchanges. In December 2018, Crypto Capital customer Coinapult announced that it was “experiencing issues” and that “withdrawals may take longer than usual.” The statement was the last made by the company, and it is currently unclear whether or not the exchange is still operational.
The now-defunct QuadrigaCX was also a client of Crypto Capital, with the exchange losing access to $190 million of its customers’ funds. Before the exchange’s collapse, Hanin asserted that the platform’s transactions were not being processed by Crypto Capital due to issues with its Taiwanese banking partner.
In May of this year, Minnesota Vikings’ investor and football entrepreneur Reginald Fowler was charged alongside Global Trade Solutions shareholder Ravid Yosef for operating an unlicensed money transmitting business on behalf of cryptocurrency exchanges.
According to the indictment, Fowler and Yosef have access to $345 million held in various international bank accounts, including accounts owned by Global Trade Solutions. Crypto Capital had also processed transfers on behalf of Bitfinex using Portuguese companies co-owned by Fowler in February 2018.
According to a press release shared with Cointelegraph on Oct. 29, the contract will have daily settlement and offers supported pairs with Bitcoin (BTC), EOS, Ether (ETH), Litecoin (LTC), Bitcoin Cash (BCH), XRP, Ethereum Classic (ETC), Bitcoin SV (BSV) and Tron (TRX).
Stablecoin-based derivatives can simplify trading
OKEx argues that offering stablecoin-based derivatives contracts will offer a simpler and more efficient means for traders to navigate the market and calculate risks.
A USDT-based derivative, in particular, will purportedly reduce the hassle of needing to switch between cryptocurrencies for those who book their profits and losses in USD value.
Lennix Lai, Financial Market Director at OKEx, has indicated that the exchange platform could roll out further USD-based stablecoin derivatives to provide similar, simplified hedging instruments.
Lai also pointed to the reasons behind the exchange’s choice to offer linear — rather than inverse — futures contracts for USDT:
“Most of the time, users are not willing to hold altcoins as margin, and they also see inverse contracts itself are complicated to understand. We see this linear contract would be an open door to many new retail traders.”
Nov. 6 launch date
OKEx’s USDT futures will officially launch on Nov. 6, with simulation commencing on Oct. 30. A USDT Perpetual Swap option will meanwhile launch on Dec. 2, with simulation beginning Nov. 25.
For USFT futures, the contracts will have a fixed delivery date, with the price set at the mean value of the index at the hour preceding delivery. OKEx has indicated that it will use a mark price to calculate users’ unrealized Profits and Losses (PnL) to mitigate unnecessary liquidation in volatile market conditions.
A daily settlement process will move unrealized PnL into realized PnL to ensure higher flexibility of capital utilization. The platform is also offering hedging tools such as insurance to assist traders.
OKEx had confirmed its intentions to launch USDT futures in late September — the same day as the exchange was once again prompted to refute fresh allegations of manipulative practices such as wash trading on its platform.
Earlier this month, Binance’s newly-launched Bitcoin futures product was an outlier in the crypto spot and derivatives markets, hitting a $700 million record as other platforms saw lackluster activity.
San Francisco-based cryptocurrency exchange Kraken adds support for OmiseGO and PAX Gold, trading starts on Oct. 29.
San Francisco-based cryptocurrency exchange Kraken is listing OmiseGO (OMG) and PAX Gold (PAXG) tokens.
According to a blog post on Oct. 28, the exchange’s users will be able to deposit, withdraw and trade both assets starting Oct. 29. Kraken will roll out trading pairs between OMG and PAXG and Bitcoin (BTC) and Ether (ETH), as well as with fiat currencies such as the euro and the U.S. dollar.
OmiseGO is a finance-oriented scaling network for Ethereum and is powered by the Ethereum-based OMG token. At press time, OMG has a market capitalization of around $150 million and is trading at about $1.06 — up 8.05% on the day, according to data from Coin360.
Earlier this month, OmiseGo became a member of Universal Protocol Alliance, a coalition of blockchain and cryptocurrency-focused firms, to incorporate the Universal Protocol Platform UPT utility token into its payment processing technology. OmiseGo intends to let stakeholders use UP stablecoins for financial services and tax collection, as well as collect transaction fees.
PAXG, an Ethereum ERC-20 token, its value is tied to the real-time market value of physical gold and is currently trading at $1,498.37, per data from CoinMarketCap. Each PAXG token is reportedly backed by one fine troy ounce of London Good Delivery gold stored in professional vault facilities in London.
According to data from Coin360, Kraken is the 12th largest cryptocurrency exchange by 24-hour trade volume, with a reported trade volume of $167.9 million over the last day.
WebSockets private API is live
Earlier in October, Kraken announced that it made its WebSockets private Application Program Interface (API) available, adding that the first two messages of the private API had gone live to all of its clients after being in beta mode since the beginning of October. According to the exchange, the first two messages of the private API will list the client’s open orders and push updates when new orders are created. It will also list the last 50 trades, pushing updates when new trades execute.
Cryptocurrency exchange OKEx is joining Klaytn, a global public blockchain platform developed by Kakao subsidiary Ground X.
OKEx announced that it is joining Klaytn, a global public blockchain platform developed by Kakao subsidiary Ground X.
On Oct. 25, OKEx wrote in a press release that blockchain project Klaytn will be onboarding the crypto exchange into their ecosystem aiming to expand blockchain adoption.
OKEx is joining a number of industry giants such as Samsung Blockchain, IDG Capital, and Shinhan Bank. The exchange called this partnership an opportunity to build a stable blockchain ecosystem and connect to different networks and portfolios in the blockchain industry. Andy Cheung, Head of Operations of OKEx, commented on the partnership:
“Exchanges and projects itself should work together to define and adopt standards that will promote digital asset adoption globally.”
Recently, cryptocurrency exchange Binance joined Klaytn’s governance council. Binance, together with another 24 member companies such as LG Electronics, Unionbank of the Philippines and Celltrion, will make key decisions for Klaytn’s business and technical developments.
OKEx announces 14 new partnerships
Following the news of OKEx joining Klaytn, the exchange reported in a press release that it had established another 14 partnerships with service providers to promote the adoption of its utility token OKB. Cheung said:
“The 14 new partnerships is a shot in the arm for OKB. Together with our community, we will continue to explore the possibility of OKB. By offering a wider array of applications, OKB holders will be able to enjoy the fruit of blockchain technology and the appreciating value of our token.”
Accusations of wash trading
In September, OKEx refuted allegations of manipulative practices such as wash trading on its platform. The exchange said that the allegations made in a recent report from the Blockchain Transparency Institute (BTI) were “not accurate and misleading.”