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Libra Congressional Hearing; Markets Sliding Back Into Crypto Fall?


Satoshi&Co Daily Crypto Newsletter

July 15 · Issue #210 · View online

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Libra v Congress
This week starts off with David Marcus, head of Facebook’s Libra project, being hauled up in front of the US Congress; the Senate Banking Committee, to be precise; As eminent a collection of grey eminences as they come, with an average age north of 60. It will likely be a theatre of the absurd. Politicians typically grandstand at these events, and these peculiarly American events are tailor-made for grandstanding, pandering to the lowest common denominator in public opinion, unsurprisingly. If you wanted to get to the truth of the matter, if you wanted to truly understand an issue, the approach would be truly different. It would not involve summoning a reluctant tech executive and trying to score brownie points off him, while asking him questions prepared by an over eager aide that probably looked up the subject on wikipedia the previous night; and whose only KPI is to make their boss, the politician asking the questions look good. Typically this involves making the executive squirm in his or her seat by asking them ‘smart’ and ‘pointed’ questions that can often verge on the inappropriate and the personal. Especially when it is clear, as in this case, what the tech executive is going to say. Apparently, a large portion of the ‘defence’, as it were, is going to be around, how Libra is a distributed entity with only a loose affiliation to Facebook, and regulated out of Switzerland.   
What is more, US regulators now want to sponsor a bill that will prevent the Big Tech companies from offering financial services. Which is a bit ironic, as the large financial services firms are increasingly reliant on technology more than ever. By some accounts, more than 30% of Goldman’s work force is composed of software engineers, and large parts of trading and even traditional investment banking have now been automated to levels unthinkable even a few years ago. Goldman has also been aggressively investing in technology companies including in the crypto currency space, with its investments in Poloniex and Circle. JP Morgan is setting up a large fintech focused office in the Valley, in addition to much publicized crypto efforts.
On the brighter side, American regulators are addressing the problem front and centre, and at least engaging in a dialogue, unlike for instance, the Indian regulator, which is literally sleeping on the issue, with nary a mention of it in the recent annual budget by the nation’s finance minister. 
We have covered Libra at length here, here and here, btw.
Crypto Summer turning into Crypto Fall?
Ever since Bitcoin reached its yearly high of $14k recently, the market has been very choppy with the price largely oscillating between $10k to $12k and alts persistently losing value both in dollar terms and against bitcoin. One peculiar trend in the recent Bitcoin bull run is the unusual underperformance of altcoins. On most occasions previously, altcoin price movements closely tracked bitcoin’s, although with a lag. This time around, altcoins’ performance is seemingly disconnected from the price movement of Bitcoin. 
Another thing to call out over the weekend was ETH’s fall of 27% after a large sell order on Bitstamp moved the price down to 190. 
There was also some sports over the weekend, in and around London. A little bit of tennis and some cricket, and some blokes racing cars. Not sure who won the cricket thing, but the English ended up getting the cup. For a change!
Meanwhile in Crypto Wonderland....
“Derivatives Exchange Seed CX Receives BitLicense”
The New York Department of Financial Services (NYDFS) has granted virtual currency licenses to two subsidiaries of aspiring crypto derivatives provider Seed CX. NYDFS Superintendent Linda Lacewell announced Monday that Seed Digital Commodities Market LLC (SCXM) and Zero Hash LLC, both of which operate under Seed CX, had received BitLicenses, while Zero Hash has also been granted a money transmitter license. The Bain Capital-backed crypto exchange launched spot trading services earlier this year, and hopes to receive regulatory approval to offer forwards trading (a product similar to cryptocurrency futures contracts) in the coming months.
“A New Bill Allegedly Bars Tech Giants From Launching Cryptocurrencies”
A drafted bill entitled “Keep Big Tech out of Finance” has surfaced online, allegedly deriving from within the United States House of Representatives Financial Services Committee. The document’s metadata dates it July 12. The bill’s provenance is unconfirmed, but crypto news site The Block quotes an inside source as saying it is with the Financial Services Committee. The alleged bill goes on to define “a large platform utility” as a tech company that earns annual global revenues in excess of $25 billion. Given that Libra is scheduled for hearings before the Senate Banking Committee on July 16 and with the House Financial Services Committee on July 17, this bill seems designed to preempt congressional authority to take decisive action on the issue of Libra.
“Royal Mint To Offer Crypto Custody Services”
Royal Mint, a government-owned manufacturer of coins in the United Kingdom, will provide crypto custodial services for the first time ever. The 1,100 year-old financial institution is participating in the launch of new cryptocurrency temtum (TEM), which is expected to go live on July 17. Specifically, Royal Mint will act as the storage for temtum genesis private keys and currency reserve, while the original private keys will be stored in the Royal Mint vault forever, the press release notes. The transaction data will be written on temtum’s Temporal blockchain, the company said, adding that TEM will be initially launched for purchases and trading on CoinAll, a major Hong Kong-based crypto exchange and a strategic partner of major global exchange OKEx.
“Tether Reportedly Prints 5 Billion USDT Tokens By Accident”
It has been at least a full week since the latest debacle involving Tether and USDT got some attention. This long wait is now over, by the look of things, as the company successfully printed $5bn USDT in quick succession, prior to burning the majority of these tokens shortly after. Speculation is running wild as to what has been going on exactly and why this was even possible in the first place. Although it is not uncommon for Tether to increase its supply by several million now and then, it is evident that adding multiple billion USDT in one go is not exactly normal. There are many possible reasons as to why this amount was created in the first place, albeit the company has yet to offer an official explanation in this regard. Even so, it is evident the overall supply of USDT hasn’t shifted by much in the end, as it remains just under $4bn according to CoinMarketCap.
Tweet of the Day
Francis Pouliot ☣️
Governments have been unable to get social scalability. The United States is perhaps the best example of large-scale government with minimized tradeoffs in freedom, and look how divisive and corrupt the system has become. They were the best hope. Result: Democracy doesn't scale!
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