CoinMetro’s CEO, Kevin Murcko brings you the most recent crypto market news during the weekly AMA every Friday.
Crypto Market News Highlights
Another central bank jumping on the bandwagon of central bank issued crypto.
Kevin said it a long time ago — this type of development was going to happen. It makes so much sense. One of the blockchain’s perfect use cases is settlement.
All central bank money will be digitalized and put on some type of DLT (Decentralized Ledger Technology). Central bank money has already been digitized for a long time, but settlement has remained shitty — 1 to 3 days, in a time where everything has been dematerialized on the internet for more than two decades. This is something that DLT/blockchain can solve.
When we started the CSD journey, we mentioned that a few players were talking about settlement. We were one of the only ones talking about this at the time, if not the only one. Even with $100m, it’s not easy.
However, it’s not too uncommon with people leaving a project, and it does not mean that it’s stalled.
There are a lot of other players in the market right now, especially in the settlement market, that are buying up smaller players who underestimated how difficult it would be to come up with a system that was inclined to actually make a difference in how the world operates in terms of currency and capital markets.
Kevin thinks that we will see more of this, and more of consolidation. The SIX Group might not be consolidated, but they might sell off the project to a bigger player in Europe.
It’s true in many instances. There is no future for mass adoption of crypto, in which people need to hold private keys. There is no way.
The mass populus do not want to jump into something with a learning curve. They need to click a button, and it needs to work.
Holding onto one’s keys will remain something that the geeky among us do, and the super “paranoid” guys. For mass adopters, it’s just not going to happen.
Is it safer? Well, exchanges can get hacked, and are targets — because they have a lot of money in them.
Putting your money in a well run exchange that mitigates risk properly by not putting too much in hot wallets and following protocols — the exchange should be able to cover that risk.
We will see more and more insurance providers offering insurance to these types of businesses.
Hamas and Iran militants obviously don’t give a shit about AML. They’ve found ways to receive and cash out Bitcoin in countries that haven’t yet instilled any type of AML/KYC policies.
They’re making themselves pseudo-anonymous rather than anonymous, which is something the US and coalition probably loves. This will probably lead to them finding more terrorists.
But when it comes out in light like this, people that don’t understand the technology — lawmakers, regulators, etcetera — they might look at this and say “Ah I knew it; Bitcoin is for criminals”.
We, as a community and as an industry — need to work together, to explain that it’s just not true.
This is a perfect example of why KYC is important.
They came out and said that it’s okay specifically for personal P2P (peer-to-peer) usage. That means that running an exchange is still either in a very gray area, or possibly illegal.
This is good news for P2P companies like Paxful and localbitcoins.
Back when India was talking about banning crypto, Kevin said that India might ban crypto initially, but they would realise that it doesn’t make sense to ban crypto — and here we go.
P2P is a lot more popular in some countries than other countries. Kevin wouldn’t think there is more liquidity in P2P trading when there actually isn’t more people.
At the end of the day, this shows that even Binance wants more liquidity — which probably means that much of the liquidity that they show, is inaccurate.
Crypto is an illiquid market. With a lot of companies trying to create funds and trade hundreds of millions or even billions of crypto, liquidity becomes even more scarce for normal people.
Getting into some type of P2P liquidity, or hooking into a liquidity provider that provides liquidity from P2P — is going to become more and more of a reality in crypto, just as it is in every other market.
CoinMetro has been using LMAX since the inception, as our main liquidity provider. Just this morning we made some updates on how we push LMAX prices into the book.
LMAX is a very mature FX provider, although a less mature crypto provider, but they’re getting better all the time. Hats off to LMAX for moving forward.
Take a look at the narrow spreads and the liquidity available in CoinMetro’s order book!
They also said that their initial stablecoin was backed by US dollars in a bank account. Now we know that it’s backed by whatever they might have on hand. If Tether has 17 chocolate muffins in a cupboard, that’s more than likely backing about €34 of Tether.
So, of course we should not trust them.
Lots of guys coming out with funds, and putting it on Ethereum. Without settlement, it’s just recreating the pain points, and putting very hard to liquidate assets on a blockchain.
What we need is to be able to settle those transactions — in real time, cross-border, to open up more liquidity — so CMEs and funds can get more capital faster and investors can get out when they want to get out.
Recap, when the story came out:
This guy was using his own name and company to provide banking services for large crypto exchanges. Bitfinex, Binance, Kraken, Bitmex all used services by Crypto Capital to hide the fact that they were doing banking for crypto exchanges, which is why it’s called shadow banking. The guy got arrested.
Kevin mentioned at the time, that these guys were going to be found guilty. The evidence against them was crystal clear. Now they’re looking for a guilty plea. We’ll see if they’ve made a plea deal, or if they’ll get the book thrown at them.
The guy might not necessarily have understood that he was doing something illegal. But even if he was licensed, it would have been an illegal operation.
These types of things happen in immature markets where regulations aren’t clear.
Tune in every Friday for “This Week in Crypto” with CoinMetro’s CEO Kevin Murcko on our Youtube channel: https://www.youtube.com/coinmetro