The month in crypto: August 2018
Sep 03 2018 · by Rabbi Ahmed
Category: Market Analysis
What’s been happening this August in the crypto space? Here’s a round-up of the most significant news, updates, and events.
Earlier this August, the Intercontinental Exchange – the colossus that owns the New York Stock Exchange among other global markets – announced a new company, Bakkt. This venture, which is set for launch in November this year, will provide a federally regulated market for bitcoin. The goal is to turn bitcoin into a trusted global currency with widespread adoption. Intercontinental Exchange has partnered with the likes of Microsoft, Starbucks, and Boston Consulting Group to make this a reality.
If Bakkt meets its potential, we could see bitcoin breakthrough as a mainstream currency.
The World Bank is to settle the first blockchain-based bond this month, called ‘Bondi,’ worth $73 million. The Australian Commonwealth Bank was chosen as the sole arranger of the issuance earlier in August.
‘Bondi’ is a two-year bond designed to bring a 2.2 per cent return and is the first created by the World Bank that uses blockchain as the supporting technology to automate the issuance process among several parties.
The US Securities and Exchange Commission (SEC) has rejected nine applications from three different applicants to list and trade bitcoin exchange-traded funds (ETFs). On all rejections, the SEC “emphasizes that its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.”
These rejections come weeks after the SEC commissioners reviewed a proposed bitcoin ETF submitted by investors Tyler and Cameron Winklevoss. Their several-year effort was cut short when a majority of the commissioners supported the agency’s March 2017 decision.
There is, however, an exchange-traded note that has recently become readily available to investors. Listed and traded in Sweden since 2015, the ‘Bitcoin Tracker One’ note is now quoted in US dollars under the ticker CXBTF.
Bitcoin is now at its highest level for 2018, with a market capitalisation dominance of just over 53 per cent (as of August 28).
As a whole, the crypto market has shot down about $28 billion. This has created an opportunity to add altcoins with potential to your portfolio, which are now available at 90 per cent less than their All-Time-Highs.
Just as the prices of bitcoin and other cryptocurrencies have fluctuated over the past month, we’ve seen a similar roller-coaster ride on the regulatory front around the world. Governments continue to question whether cryptocurrencies should be regulated, and if so, then how.
Australia has chosen to regulate exchanges by enforcing AML compliance requirements since April 2018. These dictate customer on-boarding and cryptocurrency transaction.
Leaders in the EU are planning to meet in September to discuss the prevention of ‘sinister’ uses of digital currency. Already, the EU instigated the 5th General Directive, which aims to tighten anti-money laundering controls. Virtual currencies and wallet providers will have to comply with AML regulations.
In the long run, these new regulations will help legitimise the crypto and blockchain space. Once recognised by governments, many benefits will follow: easy access to banking and other financial facilities, clarity on tax treatment, and more. These benefits have the potential to drive crypto toward widespread adoption.
At the other end of the spectrum, some countries continue to prevent businesses from entering the cryptocurrency market. China has recently toughened its stance, banning all activities relating to cryptocurrencies, including events and activities.
India, too, continues to firmly shut out cryptocurrency. The Reserve Bank of India prohibited banks from servicing digital currency businesses. This resulted in a petition at the Supreme Court of India, with a final judgement expected on September 11.
Of course, the biggest news of the month was SEC’s rejection of futures backed bitcoin ETF proposals (details above). Approval could have resulted in further institutionalising of the crypto market. This is likely a temporary setback, and the SEC will relook at such proposals again soon.
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Trading in bitcoin and other cryptocurrencies is speculative in nature, and comes with inherent risks. The analysis provided by Bit Trade is for informational purposes only, and should not be construed as investment advice.
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