Bakkt Delay Due to CFTC Concerns Over Its Planned Custody of Clients’ Bitcoin: WSJ

Much-anticipated crypto platform Bakkt’s plans to store customers’ Bitcoin (BTC) from its Bitcoin futures could cause further delay on obtaining approval from United States regulator the Commodity Futures Trading Commission (CFTC). The news was reported by the Wall Street Journal (WSJ) on March 21, citing anonymous sources.

When Bakkt was first announced back in August, the platform had revealed that its first product would be Bitcoin futures that are physically delivered daily, subject to CFTC approval. Bakkt also said that it planned to hold Bitcoin on behalf of its clients via its “physical warehousing.”

According to “people familiar with the matter,” in February, the CFTC told the platform that if it were to have custody over its customers’ crypto, it would have to take additional steps to comply. In particular, the CFTC would “require disclosures of the venture’s  business plan and a public comment period, which would have further delayed approval.”

The WSJ reported that the plan for Bakkt to custody its clients’ Bitcoin then “ran aground” that month to avoid said further delays.

Bakkt and the CFTC are reportedly now considering other ways the platform can handle the futures contract so that it is compliant with the regulator.  According to the report, the CFTC has outlined various alternative options for Bakkt, including having the firm register as a trust company. However, other sources told the WSJ that such a process could also be time consuming.

Meanwhile, a spokesperson for the Intercontinental Exchange — the operator of the New York Stock Exchange, which is launching Bakkt  — told the WSJ:

“We are working through the regulatory review process and are looking forward to updating the market soon.”

Bakkt was first slated to debut in November, but delays around obtaining approval from the CFTC pushed back the deadline several times.

Nonetheless, according to CFTC commissioner Dan Berkovitz  in an interview this week, the regulator is currently “diligently” working on issuing an approval for multiple crypto-related applications, including for Bakkt.

As Cointelegraph wrote today, March 22, Bakkt has reportedly earned a $740 million valuation after it raised over $180 million in funding last year.

Western Union Partners With Stellar Collaborator Thunes for Mobile Wallet Transfers

Payments giant Western Union (WU) is partnering with Stellar (XLM) collaborator Thunes to enable WU clients to transfer funds directly to mobile wallets globally. The development was announced in an official press release published on March 21.

Thunes is the latterly rebranded trading name of TransferTo — a cross-border payments network focused on emerging markets. TransferTo had previously partnered with open source blockchain project Stellar to trial the integration of blockchain-powered settlements into its services.

According to Western Union’s press release, the partnership with Thunes will focus on enabling the use of WU’s digital network or WU agent locations to transfer funds directly to recipients’ mobile wallets.

Western Union emphasizes that this expanded functionality aims to drive financial inclusion globally by easing financial access for the underbanked — and anyone currently not supported by traditional financial service providers.

Western Union has recently indicated it is more receptive to blockchain-based digital currencies, with the president of WU Global Money Transfer stating that should cryptocurrencies become an adopted means of exchange between individuals and business, the company “would be ready to launch” support.

Aside from crypto, Western Union is already exploring the use of blockchain technology, participating in ongoing tests with Ripple to probe the cost and time efficiency value of Ripple’s blockchain-powered settlement system.

In Stellar news, six international banks have recently signed letters of intent to issue their own fiat-backed stablecoins on IBM’s cross-border payment network, which is based on Stellar.

Japan: SBI Group Sets Up Spin-Off to Manufacture Crypto Mining Chips

Japanese financial giant SBI Group has created a dedicated subsidiary that will manufacture cryptocurrency mining chips, the company confirmed in a notice on March 22.

SBI, which has launched spin-offs covering various aspects of the cryptocurrency industry, now says it wishes to expand its influence in the mining sector through the creation of SBI Mining Chip Co., Ltd. (SBIMC).

The company will join industry stalwart manufacturers, chief among which is Bitmain, which released its latest product this week.

“The SBI Group strongly promote [sic] on a wide range of businesses based on the digital asset, including cryptocurrency exchange business and other blockchain related businesses,” the notice reads, continuing:

“The Group has practiced its cryptocurrency mining business […] overseas and has now decided to expand its business scope to the manufacturing of mining chip itself and development of mining systems, through SBIMC.”

The latest project meanwhile will see guidance from Adam Traidman, a seasoned Silicon Valley entrepreneur in semiconductors and associated electronics.

“The SBI Group will promote efficient, reliable and sustainable mining operations to develop a sound and solid cryptocurrency market,” the notice promises.

To date, SBI had only mined crypto Bitcoin Cash (BCH) via its subsidiary, beginning and ending the practice last year after concerns arose.

In September 2018, Jihan Wu, co-founder Bitmain and head of the mining pool SBI was using, claimed that the company was seeking to subvert its operations to benefit Craig Wright, the notorious entrepreneur who became a central figure in Bitcoin Cash’s contentious hard fork two months later.

Major Crypto Exchanges Huobi Global and OKEx Launch Support for Tron-Based USDT

Two major crypto exchanges — Singapore-headquartered Huobi Global and Malta-based OKEx — have announced their support for the Tron-based version of stablecoin Tether. The developments were announced in two official announcements, both published on March 21.

In early March, blockchain protocol Tron (TRX) and Tether, issuer of stalwart stablecoins USDT and EURT, announced their partnership to issue a TRC-20-based USDT — a term that indicates adherence to a technical token standard supported by the Tron blockchain. The new token is designed to be interoperable with all Tron-based protocols and decentralized applications to improve liquidity in the ecosystem.

In their respective announcements, both Huobi Global and OKEx cite user needs and demands for a full spectrum of stablecoin trading, with both noting their platforms now support three separate protocol versions of USDT — the Bitcoin network-based USDT-Omni, Ethereum-powered USDT-ERC-20 and the new USDT-TRON.

Whereas both OKEx and Huobi are among the world’s leading centralized crypto exchanges — ranked 3rd and 14th by adjusted daily trade volume respectively to press time — Tron and Tether have emphasized that the beneficiaries of USDT-TRON are intended to be traders on Tron-powered Decentralised Exchanges (DEX).

In other reported Tron developments, blockchain consultant and co-founder of Tron community project IamDecentralized.org, Misha Lederman, suggested on March 20 that the launch of USDT-TRON is slated for the coming weeks and months of Q2. Another reported development is the introduction of privacy options for TRX blockchain transactions and “institutional-friendly multi-signature & account management.”

Lederman has also claimed the Bittorrent Speed ecosystem is reportedly set to launch within this time frame, which will reward users of the popular peer-to-peer torrent client BitTorrent with Tron-based BitTorrent (BTT) tokens in exchange for seeding and bandwidth, enabling faster torrent downloads.

As reported, Tron first confirmed its acquisition of BitTorrent in July 2018. The latter launched its native BTT token at the start of 2019, which will power the pair’s plans for an evolving decentralized content distribution platform.

In recent Tether news, the coin’s issuer has faced increased scrutiny after social media users noticed the firm had removed previous claims that the stablecoin was fully backed by United States dollars. The coin has faced long-standing controversy, after critics had suggested that the dollar reserves did not match the amount of tokens in circulation. Last December, Bloomberg stated that it believes Tether does have the appropriate amount of fiat reserves. Tether has not released an official audit of its holdings to date.

Bakkt Gets $740 Million Valuation But Investors Have Questions, Sources Reveal

Intercontinental Exchange’s to-be-launched institutional trading platform Bakkt has earned a $740 million valuation after it raised over $180 million in funding last year, anonymous sources told cryptocurrency industry news outlet The Block on March 21.

Bakkt, which has yet to launch any investment products and continues to liaise with regulators, could increase its valuation even further should it raise further funds.

At the same time, the sources said questions among investors remained about their risk-return ratio, given Bakkt has yet to get the official go-ahead to launch and will operate on different terms from traditional platforms.

“From a cash-flow perspective, Bakkt will not be earning much based on their proposed contract fees, so they really need a lot of volume,” one source told The Block, adding:

“A lot of things will need to line up for investors to receive returns that they would typically expect for a Series A.”

As reported, United States regulator the Commodity Futures Trading Commission (CFTC) remains in talks to iron out kinks in Bakkt’s operations which have seen its debut pushed back several times.

Nonetheless, according to Commissioner Dan Berkovitz, there appears to be a strong will among lawmakers to ensure Bakkt’s first product — physically-delivered Bitcoin (BTC) futures — makes it to market.

Bakkt’s giant valuation pre-launch comes as the regulatory landscape in the U.S. surrounding crypto products remains uncertain across the board.

As Cointelegraph reported, the fate of the Bitcoin (BTC) exchange-traded fund (ETF) application by VanEck and SolidX, filed and withdrawn several times, currently hangs in the balance as public feedback appears to turn against the concept.

VanEck has sought on multiple occasions to assuage fears over the provenance of its offering.

UPS Integrates Blockchain Platform to Improve Merchant Supply Chains

Major American postal carrier UPS and e-commerce technology company Inxeption have jointly rolled out a blockchain-powered platform to improve merchant supply chains. The development was announced in a press release published on March 21.

The new blockchain platform dubbed Inxeption Zippy is designed to help companies list, market and distribute their products to customers. The platform purportedly enables merchants to monitor the entire supply chain from product listing to delivery, ensuring that sensitive data like contract-specific pricing and rates are only accessible to the buyer and seller.

By using the platform, merchants will purportedly be able to upload product information, schedule orders, monitor returns, process transactions, and review sales and marketing analytics, among other services.

Farzad Dibachi, CEO of Inxeption, said that the platform “creates simplified pricing solutions for B2B merchants with limited digital marketing and IT resources to easily manage all aspects of selling and shipping from one secure place.”

In mid-January, UPS made an undisclosed equity investment in Inxeption. Dibachi said then that “business customers need secure platforms that protect their customer data and proprietary information, while making it easy for them to interact and even collaborate more effectively with their customers.”

Businesses in various industries have been widely exploring the ways blockchain can improve supply chain. Recently, the U.S. National Pork Board partnered with blockchain startup ripe.io to test out a blockchain platform for pork supply chains, which will purportedly enable it to monitor and evaluate sustainability practices, food safety standards, livestock health, and environmental protections.

Earlier this month, North America’s largest branded shelf-stable seafood firm Bumble Bee Foods launched a blockchain platform for seafood traceability. Customers will purportedly be able to observe the entire supply chain, and access information on products’ origins and shipping history by using a smart device to scan a QR code on the product package.

Vitalik Buterin: High Ethereum Price Good for Security, Ecosystem Development

Ethereum (ETH) co-founder Vitalik Buterin says that high ether prices are important both for network security and the wider ecosystem’s development. Buterin made his remarks during an interview for Laura Shin’s crypto-focused “Unchained,” hosted at the Columbia Graduate School of Journalism and live-streamed on March 20.

In response to Shin’s question as to whether protocol designers and project leaders should be focusing on the question of a cryptocurrency’s price, Buterin referred to the “earlier rhetoric” of the Ethereum project, which had explicitly downplayed the importance of the asset’s value:

“In part, it was counter-signaling to distinguish ourselves [Ethereum] from other crypto projects that do pumping and lambo-ing way too much. But it was also about minimizing legal risk by basically trying to make the project seem more distant from something that would be covered by financial regulation.”

In today’s context, he continued, regulators are more conversant with the cryptocurrency space and blockchain projects, and therefore “even if people try to claim the price doesn’t matter at all, they [the regulators] are totally going to see through that.” In regard to his own views, Buterin made two cases for strong asset value, arguing:

“I can tell you what things are clearly important about why the price being higher rather than lower is good. One of them is obviously security. If the price is zero, then the network can’t be secure. That’s true in proof-of-work and proof-of-stake.”

His second argument hinged on the fact that the creators and participants in projects within a given crypto ecosystem tend to have a stake in the token, and therefore as holders, they are prospectively better-funded to develop their work if an asset’s value remains high.

Following Buterin’s remarks, the audience was asked to give live answers to the question, “Are Ethereum developers focused enough on the price of Ethereum?” Their responses settled at roughly 38 percent claiming they “don’t care,” 23 percent they “don’t know,” 21 percent a firm “Yes,” and 19 percent “No.”

Notwithstanding this alleged apathy on the part of the majority of attendees, Buterin did respond to the question of developers’ role by stating that they have a responsibility to refrain from doing “stupid things that would lead to the price going to zero,” as for example, by flooding the market with a deluge of newly minted coins.

In a recent speech at Token 2049 in Hong Kong, Buterin argued that blockchain applications outside of finance face more difficulty gaining traction, noting that finance is “realistically the first blockchain [application] that will probably achieve wide scale adoption.”  

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