New York financial district SEC

Welcome back to your daily Block Explorer crypto roundup. Today we’ll dive into the upcoming bitcoin ETF decision. First, let’s take a look at the market overview:

Bitcoin finally cracked $6,500 in a blistering overnight session on Wednesday. The total crypto market capitalization jumped $12 million in an hour with Bitcoin up more than 4%.

1. Bitcoin – $6,680 (+ 4%)
2. Ethereum – $285 (+ 1.1%)
3. XRP – $0.34 (+ 2.3%)

The rise across the crypto market appears to coincide with BitMEX (a crypto trading platform) shutting down for maintenance.

Why did that impact the price? BitMEX allows traders to bet against crypto prices. When trading was halted, anyone betting against bitcoin (with a ‘short position’) had their trades liquidated, which forced the price up.

Biggest winner and loser in the top 20

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Biggest winner – Vechain (+ 10%)
Biggest loser – NEM (- 0.83%)

Tomorrow’s ETF decision: what do you need to know?

Despite last night’s jump in prices, the crypto market has been in pause-mode lately. We’re waiting for the SEC (Securities and Exchange Commission) to make a decision on another Bitcoin ETF.

What’s an ETF?

An ETF is an ‘exchange traded fund.’ It tracks the underlying price of a commodity (like gold), an index (like the S&P 500) or a basket of stocks.

ETFs makes it much easier for the average investor to put money into the market.

A bunch of companies are now trying to introduce the first bitcoin ETF. First, the Winklevoss twins had their ETF rejected by the SEC in July.

Then, a second ETF proposal from VanEck and Solid X – which was considered more likely to get approval – was delayed until the end of September.

Price crash

In both cases, the SEC decisions triggered huge losses on the crypto market. A bitcoin ETF is widely seen as a catalyst for “institutional money” to flood into crypto, so a rejection is a set back.

Thursday’s Bitcoin ETF decision

Tomorrow, the SEC will make a decision on the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF. This time the SEC cannot delay or push back the ruling. We’ll see a decision, whether it’s yes or no.

What will happen?

The most likely outcome is another rejection. The SEC continues to push back against bitcoin ETFs, citing volatility and lack of regulation.

It’s also worth noting that the ProShares ETF is based on Bitcoin ‘futures’, whereas the more promising VanEck ETF is based on physical bitcoin.

It’s a small but important distinction. Futures are contracts in which traders agree to buy or sell bitcoin on a certain date. The physical bitcoin ETF is rooted in bitcoin’s live price.

Check back in 2019…

Most experts don’t think we’ll see a bitcoin ETF until 2019, but tomorrow’s decision could still surprise us. A Bitcoin ETF is coming. It’s just a case of when.

We’ll update you with the outcome when we hear more. That’s all for today’s roundup. See you back here tomorrow.

Today’s further reading: SEC Rejects Winklevoss Bitcoin ETF, Here’s Why it Doesn’t Matter.

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“See No Bank, Hear No Bank, Speak No Bank”: German Bank Allows Users To Transfer Loans Anywhere In The World Using Bitcoin
According to Reuters, German Radoslav Albrecht founded an online bank that allows clients to transfer loans anywhere in the world using Bitcoin. ZeroHedge reports, “Albrecht’s Bitbond uses Bitcoin and other cryptocurrencies to completely bypass the Swift international transfer system which has a monopoly and ultimate veto power on who is in – and isn’t – in the global petrodollar club, to lend money across the globe rapidly and at low cost.”

Winklevoss-Owned Gemini Exchange Becomes First Licensed Exchange to Offer ZCash
Anthony Severino of BlockExplorer reports that Gemini, the New York-based cryptocurrency exchange owned by Tyler and Cameron Winklevoss, will become the “world’s first licensed ZCash exchange”.

Australia To Ban Cash For All Purchases Over $10,000
Australia’s Liberal Party government announced it will be illegal to purchase anything over $10,000 with cash starting July of 2019. The Australian government goes on to say it’s “encouraging the transition to a digital society” and cracking down on tax evasion.

LG CNS Launches its own Blockchain Platform, Monachain
Monachain provides digital authentication, community token, and supply chain management. ZDNet reports, “The service is aimed at enterprise clients and can be applied in finance, public, telco and manufacturing industries, the company said. The platform offers digital authentication, community token, and supply chain management.”

Image courtesy of Carty Sewill, http://cartyisme.com/

Gemini, the New York-based cryptocurrency exchange owned by Tyler and Cameron Winklevoss, will become the “world’s first licensed ZCash exchange,” according to an announcement made via the company’s official blog this morning.

Starting on Saturday, May 19th at 9:30am EDT customers will be able to begin depositing ZCash they already own onto the exchange in preparation for when trading begins on Tuesday, May 22nd at 9:30am EDT. At that time, trading goes live with the following trading pairs on Gemini: ZEC/USD, ZEC/BTC, and ZEC/ETH.

The New York Department of Financial Services, who oversees New York’s controversial Bitlicense, approved Gemini adding Litecoin and Bitcoin Cash, in addition to the privacy-focused ZCash. The addition of ZCash is of particular significance due to Gemini being the world’s first licensed exchange to offer the privacy coin, but also because privacy coins have faced scrutiny over criminals potentially abusing the anonymous nature of the coin. Regulators in other countries, most notably Japan, have been targeting privacy coins, even requiring some exchanges in the region to delist privacy coins such as ZCash and Monero.

Along with Gemini’s “first,” the New York Department of Financial Services also becomes the first regulatory agency across the globe to supervise ZCash.

Maria T. Vullo, superintendent of the NYDFS offered the following statement about issuing the approval:

“This action continues New York’s longstanding commitment to innovation and leadership in the global marketplace. With smart and thorough regulatory oversight, the development and long-term growth of the industry will remain thriving,”

In a separate phone interview, Cameron Winkevoss made reference to the growing discomfort regulators feel toward privacy coins:

“Today demonstrates that through education and collaboration and with the right controls in place, regulators can get comfortable with privacy technology.”

ZCash’s price skyrocketed over 25% to a peak of $349 in the wake of the news.

Kraken’s CEO, Jesse Powell, had nothing but strong words for New York regulators who tried to compel the San Francisco based exchange to take part in it’s Virtual Market Integrity Initiative. Kraken and 13 other exchanges were instructed to participate in the Virtual Market Integrity Initiative, with the goal of seeking greater transparency regarding how trading platforms operate.

The New York Attorney General offices Investor Protection Bureau sent letters to the platforms requesting they completed a questionnaire by May 1. The forms included detailed questions on ownership, fees, money laundering and more.

According to the Attorney General, Eric Schneiderman:

“Too often, consumers don’t have the basic facts they need to assess the fairness, integrity and security of these trading platforms.”

Most exchanges were willing to cooperate with the inquiry and are interested in increasing transparency in the space. Tyler Winklevoss, CEO of Gemini whose statement was published on CNBC applauded the Attorney General and  said:

“We look forward to cooperating with and submitting our responses to the questionnaire that has been circulated.”

Powell (Kraken), however, was more critical of the regulators. In an update shared on Twitter, he said:

“Kraken’s BitLicense-prompted exit from New York in 2015 pays another dividend today. When I saw this 34-point demand, with a deadline 2 weeks out, I immediately thought ‘The audacity of these guys — the entitlement, the disrespect for our business, our time! The resource diversion for this production is massive. This is going to completely blow up our roadmap!’ Then I realized that we made the right decision to get the hell out of New York three years ago and that we can dodge this bullet.”

Kraken had ceased operations in New York in 2015 as part of the “Great Bitcoin Exodus” that resulted after the controversial BitLicense was introduced. Powell said that Kraken was open to help New York’s regulators understand their business operations as well as how the crypto space works but he believes the AG’s inquiry is misplaced and blames other crypto exchanges for “kowtowing” to the probe and others before it. Kraken also recently ceased operations in Japan due to regulatory pressure, but still ranks in America’s top 15 by volume list for cryptocurrency trading platforms.