FreeCryptoCurrency.Me

The Monetary Authority of Singapore (MAS) released a report on how asset tokenization and decentralized finance (DeFi) can work within the bounds of international standards and institutional market infrastructure.

The report, published Monday, focused on the viability of DeFi applications and ways to take real-world assets and turn them into digital tokens without risking global financial stability and integrity.

Entitled, ‘Project Guardian: Enabling Open & Interoperable Networks’, the report argued for open and interoperable private networks that offer tokenized asset exchange utilizing decentralized finance protocols. Carried out in conjunction with the Bank of International Settlements (BIS), it aims to establish best practices for decentralized finance protocols that can settle the exchange of asset classes like equities, fixed income, foreign exchange, and investment funds.

“A common framework is introduced for understanding the design options to enable the trading of digital assets across networks and liquidity pools,” it stated.

Risks associated with public networks

In contrast to highlighting the efficiencies of private digital networks, the MAS report suggested that public networks can be riskier because validators do not require approval or authorizations from official regulatory bodies. Plus, with no centralized controls on who can participate in them, it argued that this makes them susceptible to malicious activity.

In contrast, private networks were hailed as being more selective, only allowing pre-approved organizations to join. This enables a controlled environment where all participants are known and trusted entities, reducing the potential for fraudulent or harmful activities.

The risk associated with public networks was expressed with reference to a report by the Financial Stability Board (FSB) on the risks of DeFi, which noted the risk of a concentration of voting powers in decentralized protocols, where decisions are often made and carried out only by a few controlling actors. The report added that public networks run the risk of unplanned outages, stating that “the nascence of digital asset technology means that most existing protocols may not support enterprise-grade requirements and offer sufficient robustness and resiliency.”

The complexities in regulating DeFi protocols

The study outlined that the road to regulating decentralized finance (DeFi) poses several challenges, as the legal and regulatory landscape for tokenized financial assets and DeFi is still in the development stage.

Key aspects were mentioned such as recognizing digital financial assets as property, determining settlement finality, and governing DeFi protocols. The issue is further complicated by the fact that DeFi trades can be subject to varying regulations across different jurisdictions, creating inconsistencies and potential roadblocks. The report concluded that a coordinated international approach is needed to overcome these complexities.

Commercial banking trials of digital asset networks

The study listed several pilots that showcased the potential of tokenization to offer better customization, provide wider distribution, and reduce the cost and time involved in exchanging financial products.

It claimed that successful digitally native financial product pilots have been trialed by HSBC, Marketnode, and UOB. It added that UBS Asset Management is also testing a Variable Capital Company (VCC) fund, a type of investment product that will be deployed on digital networks to improve distribution and market trading.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Matter Labs this morning released the ZK Stack, a codebase for building networks using the technology underpinning zkSync Era. 

The goal is to create a network of interconnected blockchains using zero-knowledge proofs that exist alongside and running on top of the zkSync Era chain. Matter Labs is calling these networks Hyperchains and zkSync Era will be counted as the first Hyperchain. 

“What the ZK Stack is, it’s the core components for this Hyperchain vision that we’ve been working towards for some time,” said Anthony Rose, SVP of Technology at Matter Labs. “It’s a way to build and deploy these Hyperchains and it’s a toolkit to enable the community to extend this system we’ve been building — and start working towards this Hyperchain vision that we’ve been articulating.”

The move is the latest sign of an emerging competition between two alternative visions for scaling Ethereum, with Optimism and zkSync taking similar approaches, albeit with their technology differences. Optimism has its OP Stack and its Superchains, which have already found adoption with crypto exchange Coinbase. The key difference between the two is that Optimism is built on optimistic rollups, while zkSync is built using zero-knowledge proofs for all transactions.

Similar to the OP Stack, running under an MIT license, the ZK Stack is being released under a fully permissive MIT/Apache open source license. 

“Our priority is now helping many more teams understand and contribute to the ZK Stack. With more Hyperchains launching, the number of core contributors will grow, and the community will become the true owner of the zkSync network, which will empower it to be the guardian of the ZK Credo ethos and values,” said Matter Labs in a blog post.

Building Layer 2s and Layer 3s

Developers who build Hyperchains can choose to create Layer 2 networks that run parallel to zkSync Era, or Layer 3 networks that run on top of it. They are able to customize the chain, depending on the network’s intended purpose. 

Rose said that those running Hyperchains will need to run a sequencer. This is the machine that collects transactions and orders them before they are broadcast to the Ethereum mainnet. He said that Matter Labs will soon have a decentralized sequencer, but not every project will necessarily need their sequencer to be decentralized.

Hyperchains can be connected together using what Matter Labs is calling Hyperbridges. These are designed to allow for cross-chain swaps that take only a few minutes and cost as much as a single transaction. This is also somewhat similar to the Cosmos network and its IBC technology.

“So it lets you start building systems that can actually be connected in a much more meaningful way. You can actually build interoperability in a way that makes sense. You can move value in a way that makes sense,” said Rose.

Matter Labs noted that ZK Stack offers native account abstraction and claimed that some transaction types, such as oracle updates, will be much cheaper using the ZK Stack than through other rollups. It expects the first Hyperchains to go live this year.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Open interest across bitcoin futures exchanges has hit an all-time high for the year, underpinned by a comeback across the cryptocurrency market.

Aggregate open interest (OI) across Binance, Bybit, OKx and a number of other exchanges topped $11.5 billion on June 25, according to The Block’s data dashboard.

While cryptocurrencies were trading slightly lower Monday along with most risk assets, the price of Bitcoin has picked up 16.8% over the last 14 days according to CoinGecko. 

The bullish price action has been underpinned by two “notable names” moving into crypto, as noted by institutional exchange LMAX Digital. 

“BlackRock and Citadel are two of the biggest names mentioned in last week’s headlines around moves in the space,” LMAX Digital said in a newsletter, referring to BlackRock’s filing for a bitcoin spot ETF and the launch of Citadel-backed EDX Markets. 

The former development has kicked off a flurry of new filings. 

“And in the aftermath of a scare from the SEC a few weeks back, all is looking exceptionally well, as the interest from these larger players projects a confidence in the outlook.”

The crypto options market has also seen a surge in activity, with open interest across Bitcoin-tied options topping $11 billion on June 25 — an increase from just over $7.2 billion on May 27.

As per crypto trading firm Genesis, there is a large concentration of calls in the $30,000 to $35,000 range, indicating “positive sentiment among traders with significant activity in bullish near-term structures.”

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Grayscale’s flagship Bitcoin Trust has seen its discount to net asset value shrink in the wake of a flurry of new filings for spot bitcoin exchange-traded funds, according to The Block’s data dashboard. 

GBTC was trading at a 31.32% discount to NAV on June 23, a decline from a discount of 44.02% on June 13. Shares of GBTC can trade at a discount or premium to bitcoin depending on investor demand. Until early 2021, shares in the fund traded at a premium before flipping to a discount following a wide-spread crypto credit crunch. 

The narrowing of the discount likely reflects investor confidence in GBTC upgrading to an exchange-traded fund, which the US Securities and Exchange Commission has so far blocked. The asset manager is suing the agency over this matter. 

BlackRock’s filing for a Bitcoin ETF

The entrance of BlackRock into the race for spot bitcoin ETF approval has provided a new glimmer of hope for issuers that an ETF might ultimately receive a greenlight.

Indeed, Bloomberg’s Eric Balchunas described BlackRock’s surprise filing as a move that “breathed new life into the race.”

Since its filing on June 15, a number of issuers — including WisdomTree and Invesco — have resubmitted filings for their own funds following BlackRock’s lead. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Binance, the world’s largest cryptocurrency exchange, said Monday it would continue to offer trading in privacy coins in Europe after saying it would delist them in May. 

The firm told The Block that it would change how it classified privacy coins, sparing certain coins from delisting in Europe. It’s unclear when and if any other coins it classifies as privacy coins could be delisted. 

“After carefully considering feedback from our community and several projects, we have revised how we classify privacy coins on our platform to comply with EU wide regulatory requirements,” a Binance spokesperson told The Block in an emailed statement. “As a crypto exchange with registrations in different EU jurisdictions, we are obliged to follow EU regulations that require exchanges to be able to monitor transactions for coins listed on our platform.”

In May, Binance indicated plans to delist privacy coins for users in France, Italy, Spain and Poland on June 26. The decision reportedly would have affected a dozen privacy coins: Decred, Dash, Zcash, Horizen, PIVX, Navcoin, Secret, Verge, Firo, Beam, Monero and MobileCoin. 

The exchange’s reversal followed considerable community feedback and negotiations with several projects. “You spoke, and Binance listened,” privacy project Secret Network tweeted. “Binance will not be delisting SCRT, along with six other privacy-focused cryptocurrencies, in European countries,” it added — referencing Decred, Verge, Navcoin, Zcash, Dash and PIVX. 

“We are pleased to inform you that XVG will remain unaffected by Binance’s trading restrictions on privacy coins in certain EU countries,” the team behind Verge said. “Verge utilizes a public blockchain with visible transactions, amounts and wallet addresses.”

Regulatory concerns

Privacy coins are a type of cryptocurrency designed to obscure transaction details using technologies like zero-knowledge proofs — making them more difficult to track. The European Union has money laundering concerns related to transactions on such networks and said it was considering new rules that could ban privacy coins in November.

Binance’s initial move to delist was in response to local regulations, requiring the exchange to monitor transactions for all listed coins. The delistings were announced on the same day the EU’s new Markets in Crypto-Assets (MiCA) regulations became law, and draft guidance from the European Banking Authority warned crypto companies to monitor customers using privacy coins.

“While we aim to support as many quality projects as possible, we are required to follow local laws and regulations regarding the trading of privacy coins, to ensure we can continue to serve as many users as we can,” a Binance spokesperson told The Block at the time. 

“As part of Binance’s ongoing compliance processes, we have reached out to affected users, to notify them that they will no longer be able to purchase or trade privacy tokens on our platform after June,” the spokesperson added.

The reversal follows a flurry of regulatory news out of the exchange. Earlier this month, Binance said that it was exiting the Netherlands after failing to acquire regulatory approval. It also applied to deregister its local entity in Cyprus and is reportedly under investigation in France for alleged money laundering. Last week, Belgium’s regulator ordered Binance to stop services in the country.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The latest price moves in bitcoin (BTC) and crypto markets in context for June 26, 2023. First Mover is CoinDesk’s daily newsletter that contextualizes the latest actions in the crypto markets.

Open interest has surged to $11 billion to its highest level in over a year.

Banking giants like Standard Chartered, HSBC and Citi are set to run multiple tokenization trials across financial asset classes.

HSBC Hong Kong, the largest bank in the special administrative region of China, now allows customers to trade bitcoin and ether exchange-traded funds (ETFs) listed on Hong Kong’s stock exchange.

There are three crypto ETFs listed on HSBC Hong Kong’s investment platform — CSOP Bitcoin Futures ETF, CSOP Ethereum Futures ETF and Samsung Bitcoin Futures Active ETF — as per screenshots of the platform seen by The Block. Colin Wu, a Chinese crypto reporter, first reported the news. HSBC Hong Kong did not immediately respond to The Block’s request for comment.

HSBC Hong Kong allows trading in crypto ETFs; Source: The Block 

The news means Hong Kong-based users can now easily trade crypto ETFs at the bank. The development marks HSBC Hong Kong as the first bank in the region to allow trading in crypto ETFs, according to Wu, who says the ETF listings occurred today.

CSOP Bitcoin Futures ETF and and CSOP Ether Futures ETF are both managed by CSOP Asset Management and track the standardized, cash-settled Bitcoin futures contracts and Ether futures contracts traded on the Chicago Mercantile Exchange (CME), respectively. Both the ETFs were listed on Hong Kong’s stock exchange last December. Samsung Bitcoin Futures Active ETF, on the other hand, debuted this January and is manged by Samsung Asset Management Hong Kong.

Hong Kong’s crypto ambitions

Hong Kong recently introduced a new licensing regime for crypto platforms as part of its efforts to attract more crypto firms in the region as the U.S. has been cracking down on the industry. Hong Kong’s banking regulator, the Hong Kong Monetary Authority (HKMA), is also reportedly applying pressure on HSBC, Standard Chartered and Bank of China — who hold a special role as issuers of the city’s currency — to accept crypto exchanges as clients.

It remains to be seen whether HSBC Hong Kong’s rivals will follow suit in listing crypto ETFs. As for in the U.S., the race for a spot bitcoin ETF is on with several filings and refilings from BlackRock, Invesco and WisdomTree. The U.S. regulator has previously rejected similar applications multiple times in the past, mainly due to crypto market manipulation concerns.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Some LUNC token holders remain committed to a Terra ecosystem revival.