White Star Capital Digital Assets Fund - Newsletter #140
Coinbase Wins Approval to Offer Crypto Futures in the US
Coinbase Wins Approval to Offer Crypto Futures in the US
White Star Capital Digital Asset Fund - newsletter #140
Coinbase has announced this week that it has received regulatory approval from the National Futures Association to operate as a futures commission merchant (FCM), meaning the company can act as a broker for customers looking to buy and sell futures contracts. The NFA is a self-regulatory organization overseen by the Commodity Futures Trading Commission.
The cryptocurrency exchange submitted its application to the association in 2021. Now that it has received approval, Coinbase says eligible U.S. customers will be able to access regulated derivatives products through Coinbase Financial Markets. Coinbase stated that it is unlikely that the SEC will take issue with its futures offering, as the products are only subject to the oversight of the NFA and CFTC. In response to the news, shares of Coinbase Global Inc. rose by more than 5% before the market opened. Coinbase stated, "This is a critical milestone that reaffirms our commitment to operate a regulated and compliant business and to be the most trusted and secure crypto-native platform for our customers.”
Historically, due to regulatory capital requirements, crypto futures transactions have been too costly for many FCMs. This, along with the stringent collateral requirements that make return on equity for FCMs less appealing, leads to difficulties for crypto-native market participants in finding a suitable FCM. Consequently, accessing futures markets in the US can be challenging for crypto- natives, which has prevented the development of deep, liquid markets. To address this issue, Coinbase may provide intermediary services for crypto futures.
This move has the potential to bring together two major markets, Bitcoin spot and futures trading, and could lead to increased adoption of the cryptocurrency. Through its newly registered merchant with the Commodities Futures Trading Commission (CFTC), Coinbase Financial Markets will offer spot cryptocurrency trading alongside cryptocurrency futures, which serve as the basis for several Bitcoin ETFs in the United States. Bitcoin futures ETFs provide investors with exposure to contracts that trade on CFTC-regulated exchanges. While futures contracts convey the right to buy or sell Bitcoin at a set price in the future, they do not provide ownership of Bitcoin itself. Futures ETFs have historically not accurately tracked Bitcoin and are actually underperforming Bitcoin's performance this year. However, with Coinbase Financial Markets granting clients the ability to seamlessly trade both, Bitcoin futures are expected to better track the coin's spot price going forward. By having both markets in the same venue, money flows more easily between them, meaning disparities between the spot price of Bitcoin and its reflection in futures contracts should be reduced. This approach would increase liquidity and create more arbitrage opportunities, making a futures ETF similar to a spot ETF.
A spot Bitcoin ETF, which mirrors the coin's price as issuers buy the asset and distribute corresponding shares, has been awaited within the cryptocurrency community for years, as it would enable institutions that cannot hold cryptocurrency to gain exposure to Bitcoin by purchasing ETFs on a traditional stock exchange. BlackRock is one of several firms whose spot Bitcoin ETF applications are under consideration by the Securities and Exchange Commission (SEC). So far, the regulator has been hesitant to approve these applications, citing concerns about market manipulation in the Bitcoin market, which has been mentioned in every Bitcoin ETF denial letter since 2013. Nevertheless, Coinbase's newly approved venue for institutional adoption of crypto futures is a significant development. This move is expected to encourage more institutions to participate in trading futures in a regulatory-compliant manner. With greater scalability and liquid capabilities for hedging risk, it will facilitate and encourage greater institutional adoption.
Overall, this is a significant stride in expanding access to derivatives markets. By entering this area of finance, Coinbase is competing with big banks that dominate the market but are typically unable to venture into the world of crypto futures.
🔦 White Star & Portfolio Spotlight
PSP staking goes live on Optimism
PSP staking is now active on Optimism, offering reduced gas fees and the chance to earn protocol fees and refunds. To mark this launch, ParaSwap DAO and Layer3 are collaborating on the PSP Optimism Staking Quest. PSP 2.0 introduces a revamped tokenomics model with a new staking system, lower PSP emissions, and Social Escrow for value addition and ETH incentives.
Multis introduces "Vitals" to empower startup founders
Multis is introducing "Vitals", its latest product update designed to empower startup founders by providing them with informed business choices through transparent fund tracking and comprehensive cash flow analysis. Vitals enables expense management, revenue analysis, and shareable insights. Upcoming features include burn-rate and runway computation based on user feedback.
Superfluid protocol launches on Coinbase and Optimism's L2 rollup, Base
The Superfluid Protocol is now live on Base, an L2 rollup by Coinbase and Optimism. This integration offers scalable, cost-efficient token transfers, empowering developers to create applications like subscriptions, vesting, and payroll with real-time token movement.
Exclusible's Web3 Project: Discover your health predictions and ancestral heritage
Discover health predictions and ancestral heritage through Web3 with Exclusible's innovative project. Contribute to a renowned medical expert by completing a quick 3-minute survey as part of the journey, which combines predictive disease testing and unveiling ancestral origins.
Web3 Gaming's future and the vital role of account abstraction: Insights from Cometh CEO
Cometh CEO Jerome de Tychey delves into the future of Web3 gaming and the pivotal role of Account Abstraction in a conversation with BeInCrypto. He addresses the usability challenges of Web3 games and elucidates the concept of Account Abstraction, underscoring its potential to elevate user engagement and interaction within blockchain gaming.
🏦 Enterprises & Institutions
PayPal halts crypto sales in U.K. until 2024 to comply with new FCA rules
PayPal will temporarily halt crypto buying services in the UK starting October 1, 2023, to comply with new rules introduced by the UK's Financial Conduct Authority (FCA) for marketing crypto assets. The pause is in response to the FCA's regulations, and PayPal will work to enable the service again in early 2024, ensuring compliance with the updated guidelines.
Aptos rallies 15% on Microsoft partnership
Aptos Labs and Microsoft have joined forces to provide Web3 developers and users access to AI-supported tools through their partnership. This collaboration includes the launch of Aptos Assistant, a ChatGPT-integrated bot for natural language assistance in the Aptos ecosystem, and integration of the Move programming language into Microsoft's Copilot. As a result of this news, Aptos’ native ATP token spiked 15%. Additionally, Aptos will utilize Azure's infrastructure for secure validator nodes, aiming to enhance the security of the Aptos blockchain while exploring AI x DeFi innovation for advancing Web3 adoption in the financial sector.
Another country begins investigating Sam Altman’s Worldcoin
Argentina's Agency for Access to Public Information (AAIP) is investigating the Worldcoin cryptocurrency project to assess its compliance with security and privacy regulations, particularly in relation to its biometric data processing methods. The investigation will focus on whether Worldcoin's practices align with privacy laws and protect consumers' rights. This comes as other countries like Kenya and Germany have raised concerns about the project's requirement for face and iris scanning.
Metamask takes top spot as most popular wallet with 22 million downloads
MetaMask is the most popular crypto hot wallet based on app downloads, with over 22.66 million installations, according to a report by CoinGecko. Following MetaMask are Coinbase Wallet, Trust Wallet, and Blockchain.com Wallet, with each having slightly over ten million installations, and collectively, the top four wallets represent 66.6% of total wallet installations.
⚖️ Government & Regulation
Coinbase cleared to offer regulated crypto futures to eligible US customers
Despite ongoing legal issues with the SEC, Coinbase has received approval from the National Futures Association to provide eligible US customers access to crypto futures through its platforms, a move seen as crucial for expanding participation in the crypto economy. This approval comes as Coinbase is simultaneously engaged in a legal dispute with the SEC over allegations of operating as an unregistered exchange.
Singapore financial regulator issues key requirements for Stablecoin issuers
The Monetary Authority of Singapore (MAS) has introduced new regulations for stablecoins, focusing on stability and issuer requirements. These regulations, applicable to single-currency stablecoins pegged to the Singapore Dollar or other G10 currencies, demand adequate reserve assets, minimum capital, quick redemption capability, compliance with disclosure rules, and audit result adherence; only meeting these criteria allows stablecoins to be recognized as "MAS-regulated stablecoins."
SEC will appeal XRP ruling in case against Ripple
The U.S. Securities and Exchange Commission (SEC) plans to appeal a judge's ruling that determined Ripple's programmatic sales of XRP to retail investors through exchanges were not in violation of securities law, while direct sales to institutional investors were. The SEC aims to seek an "interlocutory appeal" to challenge this part of the decision, potentially avoiding the need for two separate trials as other aspects of the SEC's case against Ripple proceed.
Abu Dhabi grants virtual asset firm M2 permission to offer crypto services
The Abu Dhabi Global Market's (ADGM) Financial Services Regulatory Authority has granted M2, a virtual assets firm, financial services permission (FSP) to operate a multilateral trading facility in the UAE capital. This regulatory approval will enable M2 to provide institutional and retail clients in the UAE with the ability to trade, buy, sell, and custody virtual assets like Bitcoin and Ethereum on their platform, which is set to launch later in 2023.
Nigerian authorities call on the government to ban Binance amid Naira crisis
The Association of Bureaux De Change Operators of Nigeria (ABCON) has called for the prohibition of Binance's operations in Nigeria, citing its impact on the strain on the Naira. ABCON's president emphasized that Binance's role in the country's currency market was exacerbating pressure on the Naira due to its liquidity and urged for local solutions to address this competition.
💰 Funding & Exits
Zepeto, Jump Crypto joint venture ZTX raises $13M for metaverse platform on Arbitrum
Zepeto, a leading South Korean metaverse platform, is expanding into the blockchain space with its ZTX initiative in collaboration with Jump Crypto. ZTX has secured a $13 million seed round led by Jump Crypto and aims to boost crypto adoption by introducing NFT-based ownership to its 3D environments on Ethereum's Arbitrum, offering access to districts, events, and in-game enhancements.
Binance Labs invests $10M to accelerate Helio protocol's liquid staking pivot
Binance Labs has invested $10 million in Helio Protocol as it transitions to a liquid staking platform. Helio, currently on BNB Chain, plans to expand to Ethereum, Arbitrum, and Zksync, enabling users to stake tokens and receive liquid staking tokens (LSTs) for more efficient participation in DeFi.
Dinari raises $7.5 million in Seed funding for Web3 corporate equity trading platform
Web3 corporate equity trading platform Dinari has secured $7.5 million in seed funding from investors including Third Kind Venture Capital, 500 Global, and former Coinbase CTO Balaji Srinivasan. Dinari is launching the dShare trading platform, which pairs tokens with underlying securities, enabling global users to access transparent and asset-backed corporate equity markets, excluding the U.S.
Spearbit raises $7M to improve security audits in crypto through Cantina marketplace
Spearbit, a crypto security startup, has raised $7 million in funding led by Framework Ventures, with participation from Nascent, 1kx, Volt Capital, and others. The funds will support the development of Cantina, an open marketplace for web3 security auditors, and expansion of the team to automate services. The company aims to enhance security in the crypto space through transparency, fair compensation for auditors, and improved practices via the Cantina platform.
Bitcoin Web3 Wallet Xverse raises $5 Million in Seed funding led by Jump Crypto
Bitcoin web3 wallet Xverse has raised $5 million in a seed funding round, led by Jump Crypto and joined by investors including Franklin Templeton and Alliance. Xverse, which supports ordinals inscriptions and BRC-20 tokens, plans to expand its team and further enhance its support for the Bitcoin Lightning Network with the fresh capital.
HypeLab raises $4 Million in Seed funding to drive Web3 user adoption with personalized ads
Web3 advertising startup HypeLab has secured $4 million in seed funding led by Shima Capital and Makers Fund. Utilizing on-chain data to personalize ads, HypeLab aims to drive user adoption in web3 and has already assisted over 50 companies in acquiring new web3 users.
🚀 Project Launches & Updates
Coinbase continues its global expansion by entering the Canadian market
Cryptocurrency exchange Coinbase has officially launched its operations in Canada, introducing "Coinbase One," a 30-day trial offering zero trading fees and priority support for local users. The company highlighted the comprehensive regulatory framework in Canada and the local interest in innovation as reasons for expanding into the North American nation. This expansion comes amid regulatory challenges in the US, where Coinbase has faced legal issues with the SEC, and follows the company's recent efforts to expand its presence in other countries like Bermuda and the UAE.
Coinbase, Binance, and Kraken all announce support for new Layer-1 crypto project
Coinbase, Kraken, and Binance have announced support for Sei (SEI) trading. Sei Network, built on Cosmos, is a layer-1 blockchain optimized for digital asset exchange, positioned as the fastest blockchain in the industry, and designed for trading across various domains including gaming, social, and NFTs.
Jacobi Asset Management Launch Europe's First Bitcoin ETF
London-based Jacobi Asset Management has launched Europe's first Bitcoin exchange-traded fund (ETF) on Euronext Amsterdam after obtaining approval from the Guernsey Financial Services Commission. The Jacobi FT Wilshire Bitcoin ETF aims to provide institutional investors secure and transparent access to Bitcoin, incorporating a verifiable Renewable Energy Certificate (REC) solution to promote decarbonization and align with sustainable objectives.
🔥 Other Bits We're Excited About
Bitcoin outperforms S&P 500 in August, market bottom near?
Bitcoin (BTC) is in a strong consolidation phase around $29,000, with low volatility and other on-chain indicators signaling multi-year lows. Despite this, Bitcoin's stable trend is outperforming equity markets like the S&P 500 in August, with a shift away from correlation potentially beneficial for cryptocurrency prices.
Solana's NFT expansion drives price surge amidst risks
Solana ($SOL) has surged 11% in the past week, reaching just below the $25 level, showing bullish momentum after a recent 30% drop. The platform's expansion in the NFT sector, becoming a favored blockchain for launching new NFT collections, has contributed to its recent price rise, with over 890,000 NFT transactions on Solana in the past 30 days.
Saudi firm implements Blockchain solution for Web3 summit
Saudi Arabian company IR4LAB has implemented a blockchain-based solution, called DocCerts, for registering and providing certificates of attendance for the Blockchain Research Institute (BRI) Web3 summit. This event, held in Riyadh, will offer attendees blockchain-enabled registration certificates, marking the first such implementation in the region, and aims to explore blockchain advancements aligned with Saudi Vision 2030 objectives, featuring industry leaders and experts as speakers and panellists.