Crypto Week In Review: Binance Makes OTC Desk Investment, Bakkt Delays Bitcoin Futures
As 2018 bids its last farewells, the crypto market has stuttered, with a majority of crypto assets establishing new year-to-date lows, leading many analysts to express their sentiment that capitulation is officially occurring. However, the peculiar performance of the market hasn’t fazed this industry’s leading constituents. Binance, for one, continued its investment spree, siphoning millions into a budding upstart.
Binance Throws $3 Million At OTC Crypto Desk, Foray Into China Expected
Binance, the crypto industry’s leading retail exchange, hasn’t seemingly remained unfazed amid the cryptocurrency market downturn, recently diverting $3 million of its venture arm’s war chest into Koi Trading, a U.S.-based over-the-counter (OTC) trading desk that specializes in non-retail crypto exchange.
Per previous reports from algo investing, Koi Trading also has hands in the jars of other industries, which include data science and analytics, quantitative research, and compliance. The San Francisco-based startup’s expansive portfolio presumably made it a logical investment for Binance itself, which has been ramping up its ventures throughout 2018’s dismal market.
Still, it was divulged by Ella Zhang, chief of Binance Labs, that her firm’s investment in the OTC desk was triggered by the alignment of Koi Trading’s and that of Binance. Zhang explained:
“Koi’s Trading mission is to bridge fiat and cryptocurrencies in a compliant manner. This aligns with our broader vision at Binance to build the infrastructure which provides the freedom of exchange globally.”
Although Binance’s investment in Koi seems cut and dried, some believe that the $3 million investment was made in a bid to capitalize on China’s tumultuous crypto scene, which has been beaten and battered by local regulators in recent months.
Per Hao Chen, CEO and founder of the startup, Koi has been bolstering its business relationships in “Greater China,” alluding to speculation that it may foray into that market in due time. It isn’t clear how the desk will skirt Beijing’s regulations, which have included a crackdown on OTC platforms and online discussion regarding cryptocurrencies, but many are hopeful that Koi’s entrance into China will catalyze another round of investment “FOMO” from the local clientele.
Bitcoin Commerce Payments Down 80% Since January, Scalability Blamed
Per data from Chainalysis, a leading crypto analytics startup, the U.S. dollar value of on-chain Bitcoin payment processor-based transactions has fallen drastically since early-2018’s all-time high. More specifically, the aforementioned statistic has taken an 80% hit since January, comparable to BTC’s 75% decline in the same time frame.
To attribute figures to this collapse, Reuters expressed that in late-December/early-January, over $427 million in BTC was transacted for retail payments. Now, just shy of a year later, this figure has fallen to a mere $96 million. While the latter figure isn’t something to sneeze at, the fact that such a collapse occurred, even though BTC found a semblance of stability in recent months, isn’t a promising sign for the short-term prospects of crypto.
Speaking on these statistics, London-based UBS strategist Joni Teves explained that scalability should catalyze the global adoption of Bitcoin in commerce. This sentiment echoes comments issued by Joey Krug, an Augur co-founder turned Pantera Capital executive, who told Bloomberg that the lack of efficiency on decentralized blockchain networks is directly hampering adoption.
Although the cryptosphere only recently began to walk on its own two legs, Krug explained that scaling blockchain networks, while difficult, is something that innovators within this industry can accomplish with a dab of elbow grease, grit, and determination. And when that happens, the Pantera executive added the crypto industry will undergo its next round of a Cambrian-level bout of growth, which Krug says will boost digital assets values by tenfold.
Bakkt Delays Bitcoin Futures Launch
After a multi-month hype cycle, Bakkt, an Intercontinental Exchange (ICE)-sponsored crypto-centric initiative, has divulged that it has fallen victim to an unfortunate road bump, a byproduct of the corporate world today.
Through a Medium post on the matter, Bakkt CEO Kelly Loeffler, formerly of the Intercontinental Exchange (ICE), revealed that her startup is now “targeting” January 24th, 2019 for the launch of its physically-backed Bitcoin futures contract, instead of December 12th. Loeffler, evidently aiming to calm players’ qualms regarding Bakkt, noted that “given the volume of interest in Bakkt and work required to get all our pieces in place,” a delay would be duly in order to ensure the program’s clients and business partners are poised for launch.
The 40-day delay aside, Bakkt has maintained that it is hell-bent on putting the pedal to the metal, as it were. Loeffler, wed to ICE CEO Jeff Sprecher, explained that the “level of collaboration at the exchange, customer, and regulatory levels are unprecedented in terms of engagement and effort,” indicating that crypto’s dismal market conditions haven’t fazed true “BUIDLers,” a moniker endowed upon this industry’s diehard believers.
Moreover, the startup chief added that Bakkt has secured cold storage insurance for its Bitcoin (BTC) holdings, a claim-to-fame that is likely to entice institutional investors into crypto.
Still, while the Medium update concluded on a high note, with Loeffler offering a fleeting glimpse of silver linings, the bottom line is that Bakkt’s futures instrument isn’t slated to go live yet. And the timing couldn’t have been much worse, to be frank. In fact, some pessimists have argued that Bakkt’s recent announcement imbued the cryptocurrency market with an influx of skepticism. But, considering the tumultuous market conditions, no one knows for sure.
Related Reading: Bakkt Focusing on Bitcoin Due to Its Liquidity and Classification as a Commodity
- Edward Snowden Thinks Cryptocurrency Is Logical: World-renowned, libertarian-leaning whistleblower Edward Snowden recently sat down with Ben Wizner, his legal counsel, to have a candid conversation pertaining to blockchain technologies and cryptocurrencies. Interestingly, Snowden, who unveiled sensitive NSA documents in 2013, broke down the basic of blockchains, conferring on what makes this newfangled innovation tick and, more importantly, the value of this form of data management. The now-Russia-based former NSA contractor explained that blockchains, while currently inefficient, solve a key issue — the overabundance of trust. As made clear by 2008’s Great Recession, the presence of trust in financial ecosystems may be a detriment to consumers. Keeping this in mind, Snowden eulogized Bitcoin, Monero, and ZCash for their viability as scarce, uncensorable, trustless, and borderless mediums of value.
- Coinbase Loses Mike Lempres To Andreessen Horowitz: While the crypto industry is lauded for its capability to catalyze Wall Street and Silicon Valley brain drains, Coinbase has divulged that Mike Lempres, the startup’s chief legal officer, decided to abdicate his position to foray into venture capital through Andreessen Horowitz (a16z). Interestingly, Menlo Park, California-based a16z, a forward-thinking firm itself, has close ties to Coinbase and the crypto industry, so Lempres’ sudden exit isn’t nonsensical. Taking his place will be Brian Brooks, formerly of mortgage giant Fannie Mae, who initially hopped onto the cryptocurrency gravy train in September. So make no mistake, Coinbase’s legal team is being left in good hands.
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