German Stock Exchange Boerse Stuttgart Group Is Launching Crypto Trading Platform

German Stock Exchange Launching Crypto Trading Platform

Boerse Stuttgart Group, the second-largest stock exchange in Germany, is planning to launch a crypto trading platform early next year. The exchange announced its partnership with a local fintech company, SolarisBank. Together, the two aim to create an engineering infrastructure for digital asset trading.

Alexander Hoptner, the CEO of Boerse Stuttgart stated

“With its combination of technology and banking expertise, SolarisBank is a great partner for us to offer central services along the value chain for digital assets.”

Users may be able to trade ether and bitcoin on the exchange and there may also be support for other tokens after their initial coin offering.

Boerse Stuttgart’s exchange will be accessible to both individual and institutional investors. The exchange will also have features similar to the traditional stock trading platform, such as open order books and order execution.

Currently, the exchange has applied for regulatory approval from the Multilateral Trading Facility that will enable it to function as a crypto trading marketplace. SolarisBank has also partnered with Bitwala, another crypto exchange, to promote crypto banking services.

Why Has Coinbase Not Added Ripple (XRP) Into Its Crypto Trading Platforms?

Just under a week back (on Dec 7), a spokesperson for Coinbase announced that his firm was looking to integrate a total of 31 different crypto assets onto their native exchange platform.

In this regard, one of the alt currencies that the platform was looking to incorporate was the XRP token (currently the world’s second most valuable crypto coin by total market cap).

Over the course of the past few months, the folks over at Coinbase have repeatedly expressed their desire to list XRP on their exchange-interface. However, it now appears as though many investors are not satisfied by the firm’s recent actions since they have time and again avoided listing XRP, even though they have added support for tokens like Decentraland (MANA) earlier this month.

So Why is Coinbase Not Listing XRP?

Some of our readers may remember that earlier this week, Coinbase VP, Dan Romero, stated in an interview that he wants his company to eventually list “90 percent of the world’s legally compliant assets” as long as they fulfill certain quality requirements.

Additionally, he also spoke about how in the near future Coinbase wants to provide people with a host of trading options (much like the way in which the conventional traditional stock market works).

Romero then went on to add:

“Our recent shift in strategy is really driven by customers. When we asked customers the number one thing they want, they told us it’s adding new cryptocurrencies to the platform. With a traditional stock exchange, they list everything above a certain quality bar. And ultimately investors and individuals make decisions on what to invest.”

More On The Matter

With Coinbase repeatedly claiming that its number one priority right now is to “add new and unique crypto assets” to its native platform, over the past month or so, there have been many investors who have questioned the inability of the exchange to add XRP (despite it being the second largest cryptocurrency in the world).

In this regard, this cautious approach taken by Coinbase could be due to a pending court case between Ripple Labs and a group of investors who are alleging that the asset is a ‘security’.

Also, on the matter, SEC chairman Jay Clayton said that the commission is still awaiting a decision on whether the Federal court deems XRP to be a security or not (so as to then take further action on the matter). On the aforementioned issue, Clayton went on to say:

“The question I get most frequently: ‘do you think XRP is a security?’ Unfortunately, I can’t answer without giving legal advice. Even if I could, I’d only be speculating about what a judge or jury may decide and what Ripple is willing to accept in a settlement. Just have to wait.”

Final Take

Till we hear more from the US federal court in relation to the above stated matter, it is quite safe to assume that we will not be seeing XRP on Coinbase anytime soon.

Delphi Blockchain Analysis Shows Four Out Of Five Bitcoin Wallet Addresses Hodl Under $100 USD

80% of Bitcoin Wallets Contain Less Than $100

There are 23 million bitcoin wallets in the world today. The vast majority of those bitcoin wallets, however, are virtually empty, according to a new report.

An analysis released by digital asset research firm Delphi uncovered 22.9 million bitcoin addresses that were holding at least some amount of bitcoin (an amount greater than zero). Of those 22.9 million addresses, however, most contain less than $100.

The information was published in a report called, “The State of Bitcoin”. The 59-page report explores the long-term value potential of bitcoin, including an analysis of where bitcoin could be going in the future.

Delphi cautioned that many of the 22.9 million bitcoin addresses will belong to a single user. One user might split his bitcoin into 10 addresses or 100 addresses, for example. The fact that there are 22.9 million accounts holding bitcoin does not mean that there are 22.9 million bitcoin hodlers out there.

In the chart published by Delphi, we can see that 50% of bitcoin addresses have less than 0.001 BTC (around $3.70). Additionally, only 20% of addresses store more than $100 USD. In other words, 80% of bitcoin wallets contain less than $100.

Meanwhile, fewer than 700,000 bitcoin addresses own more than 1 BTC (worth approximately $3,400). Of those accounts, 588 addresses are richer than $10 million.

Delphi Digital is a New York-based research and consulting company focused on exploring the digital asset space.

The report identifies a number of other crucial points about the future of bitcoin. It explores the risks to bitcoin, for example, and the problems that could affect bitcoin moving forward. Some of the risks include PoW energy consumption, competition, failed infrastructure development, and continued volatility or hard forks. All of these things could reduce the value of bitcoin – or even destroy bitcoin – moving forward.

The report also highlights the power of bitcoin in emerging markets. Venezuela and Argentina are both mentioned. The two South American countries are home to some of the highest bitcoin-using rates per capita. Delphi’s analysis finds that people in developed economies may not have great motivation to use bitcoin at this time, but those in emerging markets have motivation to use bitcoin today. In Argentina and Venezuela, for example, fiat currency prices can be volatile, and bitcoin is seen as an alternative type of currency insulated from local economic troubles.

Delphi also analyzes where the price of bitcoin could go:

“The upside potential for bitcoin is immense assuming it captures even a modest portion of the total assets held in offshore bank accounts, the investible gold market, and central bank gold reserves,” explains the report.

The report explains that if bitcoin is able to capture 10% of this market, then the price of bitcoin has a 75% chance of being $54,816 within 10 years. If bitcoin can capture 75% of the market, then it will be worth as much as $411,117.

“While we remain very constructive on the long-term outlook for bitcoin, there are many hurdles it most overcome before it can become an alternative means of storing value,” explains Delphi. “Price volatility, secure custody solutions, and global regulatory uncertainty are just a few of the challenges currently suppressing demand for bitcoin.”

Nevertheless, Delphi believes that bitcoin has a good chance of surpassing these problems:

“Barring any major disruptions to its network, however, over the long run we foresee bitcoin serving as a staple allocation in traditional investment portfolios, central bank reserves, and as a suitable alternative for a portion of assets held in offshore accounts.”

If bitcoin can capture even a small slice of this market, then it could surge in value over the next 10 years.

Infinito Wallet And Blockpass Release Secure KYC-Enabled Security Token Crypto Wallet

The World’s Most Secure Digital Asset Wallet By Blockpass And Infinito Wallet

Regulation of the cryptocurrency industry has become a hot topic in the world today. The anonymous nature and sometimes private nature has been blamed for the slow adoption of the digital assets. This has led to measures being taken both by the government regulators and the blockchain companies to ease out the field. One of the most common compliance measures, Know Your Customer (KYC) has seen great adoption by the industry.

In the latest announcement, Blockpass and Infinito Wallet are partnering to launch a KYC-enabled security token wallet. Termed as the ‘world’s most secure and convenient wallet’ the wallet will provide regulatory compliance while putting traders in full control of their security tokens.

The future of global trade and transfer of value lies in decentralized networks hence the key focus by Blockpass to form meaningful partnerships to achieving this. This recent partnership with Infinito Wallet will allow users to seamlessly exchange security tokens over its wallet. More so, Infinito Wallet is also working on developments to improve security tokens transfer. Blockpass and Infinito Wallet will bring easy access to securities tokens and other Blockchain services as they enter into mainstream adoption.

Speaking on the partnership, Jack Thang Nguyen, Project Director of Infinito Wallet, commended the partnership as a futuristic move that will strengthen its position as a crypto market leader. He further said,

“Today’s announcement with identity system leader Blockpass is another solid step in building our authority in the security token space and consolidating our position as leader in the cryptocurrency wallet ecosystem. Partnering with Blockpass will allow Infinito Wallet users to store, send, receive and utilize their security token.”

Adding praise to the partnership the CEO of Blockpass, Adam Vaziri said that the future of blockchains and trade lies in having efficient security token transfers. Blockpass is currently working on improving the field of security tokens transfers as well as the overall blockchain developments. He continued saying,

“Our longstanding partners, Infinito Wallet, were perfectly suited to work with us to provide this regulatory compliant solution which will give users control in such a vital area. We are excited to be at the forefront of the security token revolution.”

In addition to the partnership to Infinito Wallet, Blockpass has also announced key collaborations with Edinburgh Napier University to develop the Blockpass Identity Lab. The Blockpass Lab will focus on creating innovative and real-world problem solving systems to improve the current rights to privacy on blockchains. Blockpass will partner with Professor Bill Buchanan to offer five studentships to innovative and creative students across the world.

Crypto Exchange CEX.io Now Requires AML Verification

UK-based cryptocurrency exchange CEX.io recently announced a major change to its operations: CEX.io will require users to complete anti-money laundering (AML) verification moving forward.

The news was announced via a press release earlier today.

The London-based crypto exchange has declined the option of allowing users to remain anonymous. Moving forward, users will be required to verify their identities to help prevent criminal activity on the platform. The move is expected to help CEX.io stay abreast of financial services regulations in the EU and around the world.

Earlier this week, a G7-funded research group discovered that many UK-based cryptocurrency exchanges were ignoring the UK’s laws on money laundering and counter-terrorism financing regulations. CEX appears to have made the AML announcement in response to this news.

CEX was founded in 2013 and claims to be a self-regulated entity. In the U.K., virtual currency exchanges are required to abide by the European Union’s Fifth Anti-Money Laundering Directive, which specifically covers custodian wallet providers and crypto exchanges.

In the press release announcing the news, CEX.io claimed the move was made to “provide users with high-level and reliable service” moving forward.

“We have always understood the importance of dealing with virtual currency within a legal framework, so mandatory verification for customers who transact in fiat currency was introduced long before the Fifth Anti-Money Laundering Directive was adopted in the EU,”

explains CEX’s Regulatory Affairs Counsel, Serhii Mokhniev, as quoted by Finance Magnates.

The Fifth Anti-Money Laundering Directive is not scheduled to take effect until January 2020. However, financial firms – including cryptocurrency exchanges – are preparing for the changes today.

Complicating things even further is that the United Kingdom may not be an EU state by that point.

Nevertheless, exchanges like CEX.io cater to international audiences, so it’s in their best interest to stay up-to-date with major regulatory changes like the one announced by the EU.

Today, CEX.io claims to have 2.5 million users worldwide. The exchange is also a registered member of America’s FinCEN, which is a regulatory branch of the U.S. Department of the Treasury.

CEX has played a crucial role in British crypto exchange history. Founded in 2013, the exchange has 5 years of experience attracting users from across the UK and around the world. CEX is also a founding member of CryptoUK, an organization dedicated to representing crypto businesses in the country while also influencing government policy.

CEX.io supports eight of the world’s most popular cryptocurrencies along with four fiat currencies. However, the exchange is relatively small compared to some of the biggest entities in the world, handling just $5 million in volume over the last 24 hours, placing it in the #71 position of the top cryptocurrency exchanges by trading volume.

Top pairs on the exchange include BTC/USD, BTC/EUR, and ETH/USD.

Kraken Considers Private Offering, Seeks Out To High-Value Clients With $4 Billion Exchange Valuation

Kraken Considers Private Offering By Reaching Out To High-Value Clients

The Kraken exchange is one of the most successful crypto endeavors to come out of the United States. They’ve been continually successful, but the time has come for them to move on to their next venture. In a recent email to their high-value clients, Kraken inquired about their desire to be involved with a new investment opportunity.

Based on the information offered in the email, completion of an online survey is required before any additional information is offered. The exchange emphasizes to their clients that they don’t require financing, but the bear market and “significant reserves” are a sign that this is a good opportunity to participate in acquisitions.

Presently, as the message indicates, Kraken’s listing shares are for sale for $4 billion, though the minimum investment needed for participation is $100,000. Continuing, the email says,

“The transaction process will be done by a 3rd party service, who will run accredited investor checks, facilitate the execution of transaction documents, and the funding of your investment.”

Every investor will be checked to see if they meet eligibility requirement in order to participate. The survey will be open until December 16th for potential investors to respond. Additional details are promised to be released soon, though the opportunity looks as if it is targeting banked crypto enthusiasts.

In December, when the market was succeeding, Kraken went through some tech glitches that prevented its services from functioning properly. However, the team has been adamant about improving the staff behind its tech and support, while also creating and launched a matching engine. Though they condensed their staff through the summer, the company has used this room to grow as they have continued updating their product through 2018.

Some people may take notice of the $4 billion valuation for Kraken. After all, the company is ranked 20th in trading volume, even though they’ve repeated how profitable they are during this slump. Earlier in the year, it saw an $8 billion valuation after a $500 million investment, when Bitcoin was holding its ground at $6,600.

Even with the problems that the Kraken exchange has had to deal with, they have maintained their numerous crypto listings. However, that advantage over other exchanges could be challenged as the market for altcoin contracts and Bitcoin dominance flourishes. In the meantime, for investors that qualify, contributing the $100,000 to risk the shares in Kraken could turn out to be more advantageous than purchasing cryptocurrency alone.

Gibraltar Blockchain Exchange (GBX) Secures Crypto Asset Insurance Via Callaghan Insurance

Amidst Risit Cyber Attack Rates, Gibraltar Exchange Obtains Insurance For Its Crypto Assets

Owing to the rising rates of cyber attacks these days, a spokesperson for the Gibraltar Blockchain Exchange (GBX) has just announced that his company has obtained an insurance policy that will effectively cover all of the firms’ digital assets (the deal will be facilitated in conjunction with Gibraltar-based Callaghan Insurance). To be even more specific, we have received word that GBX has gotten both its hot as well as cold wallets insured for added security.

In relation to the matter, Nick Cowan, CEO of GBX, had the following words:

“We are delighted to announce the introduction of insurance coverage … this represents an important step in attracting users who require strict assurances around the security of their assets. We are committed to building a platform focused on the highest regulatory standards and the strictest due diligence processes.”

Cybercrime Rates Are On The Rise

Over the course of 2018, losses due to attacks by hackers on different crypto exchanges have amounted to a staggering $930 million (so far). Not only that, latest data obtained from U.S. security firm ‘Ciphertrace’ also shows that the global IT industry is at a massive risk of third party threats due to which many firms have started implementing better security protocols (so as to safeguard investor funds more effectively).

Is Gibraltar The Next Global Crypto Hub?

It is worth noting that over the last 6-8 months, the Gibraltar government has been making it easier for crypto enthusiasts to set up base within the British-territory. On the matter, Bruno Callaghan, the MD for Callaghan Insurance Brokers, was quoted as saying the following:

“I am delighted that Callaghan have been able to procure, after much research and collaboration with the London insurance market, a bespoke, fit for purpose coverage option that affords our clients and the jurisdiction the necessary protection to move forward confidently in the distributed ledger technology arena.”

Final Take

Some of our readers may be intrigued to learn that GBX is administered by the same company that also owns the Gibraltar Stock Exchange. Lastly, it is also worth noting that GBX was recently granted a full license to operate within Gibraltar by the nation’s financial regulator.

First Official Debate About Cryptos To Happen On South Korea’s National Assembly

First Official Debate About Cryptos To Happen On South Korea’s National Assembly: Possible Outcomes

The world is set on regulating cryptocurrencies. Today, December 10, South Korea’s National Assembly is set to reunite and discuss the future of crypto in the country. The debate was set up by most of the important exchanges in the country, which included names like Upbit, Gopax, Korbit, Coinone and Bithumb.

All exchanges will have representants talking at the conference and will discuss the regulation of the industry in the country, as well as

This is the first time that several members of the National Congress get together to debate openly about the future of cryptos. Read our article to find out the main subjects of the debate and the possible outcomes.

The Main Points Of The Debate

One of the most important points that will be debated in the meeting is the transparency and efficiency of the crypto exchanges, as last month the Financial Services Commission (FSC) of the country has allowed banks to create virtual bank accounts for business related to the blockchain technology and crypto exchanges.

Because of this, the exchange operators may have some new benefits but they will also have to be fully compliant with the laws from the government and a strict set of guidelines which will be released in January and will prohibit people from trading with unconfirmed bank accounts.

This would be good both for the governments and exchanges because it will help to regulate the sector and smaller crypto exchanges are still struggling to get support from banks in the country. Also, this prevents some large crypto investors from sending large amounts abroad using their bank accounts, which could help them to expand.

Another issue that will probably be discussed a lot is the importance of the crypto exchanges for the future of South Korea. The government has recognized the blockchain technology as an important pillar of the so-called “Fourth Industrial Revolution”.

Because of this, the country is interested in creating a non-hostile environment and in bringing in new talent for the development of a new blockchain ecosystem that will help to drive the growth of the country up. According to the government, digital exchanges have a very important role in this process as they will drive the process of this revolution.

The final of the main points if the practical regulatory framework. It is widely known that this space needs a clear framework to grow, so this will certainly be discussed during the meetings. Both crypto exchanges and the government are keen on agreeing on a framework that can be good for everybody and represent some stability.

The country is already creating some important policies like banning anonymous crypto transactions. However, some exchanges fear that the government may overregulate the market. Its policies need to be practical and be implemented fast, though, as a cumbersome regulatory framework could become an enemy of innovation.

Possible Outcomes

It’s always good when businesses and government agencies communicate between themselves and facilitate the growth of the industry. The encounter will probably be good for the market even if no decision is made because it bonds the government and the exchanges and they may see new paths to follow together.

If some important change is actually made, though, it will be very good for the market and it will signal a bright future for cryptos.

New Crypto Exchange Ranks (CER) Report Updates Latest Bitcoin Trading Platform’s Ratings

There Are New Report Updates On The Crypto Exchange Ratings

The report on the quarterly ratings has recently upgraded the score that was given to about seven crypto exchanges and having four downgraded. At the same time, it has been able to add seven new exchanges, which has rated them on the same metrics as the trading volumes, compliance and security.

The CER, Crypto Exchange Ranks, has started tracking the cold and hot wallets as part of the mission in championing better transparency within the industry.

Bithumb Has Been Upgraded And Okex Downgraded

The ratings for crypto exchanges together with the cryptocurrencies have been considered to be highly subjective. It is because any type of ranking or even rating is bound to bring a lot of controversy around the matter. However, the quarter rating report is still growing in popularity as it continues to shine the spotlight on the different verticals that are within the crypto ecosystem.

With the latest report presented by Tokeninsight, it has been able to track the progress of various crypto exchanges in the past three months despite the difficult conditions that are witnessed in the market.

There have been unique investors who have dropped across the board in just the last quarter, but all having an exception to the Bithumb as its aggregated score together with traffic has risen. But when we compare with the Okex, it has seen its weight score drastically fall, which seem to worsen when it unilaterally changed the trading rules in the rating period. They made changes on the contract delivery rules together with the modification of the data rollbacks.

But there was some upgrade witnessed by the ratings done by Tokeninsight this is the Kraken, Hitbtc and the Kucoin. At the same time, the Gemini and the Poloniex are also among the ratings that have been able to be given ratings for the very first time.

The Trans-Fee Mining Exchange Has Scored Poorly

The transaction fee mining exchanges that are mostly linked to the wash trading and the fake volume have also gone ahead to score very poorly in the Tokeninsight report. One of the casualties to this is the Fcoin exchange for Hong Kong, were its score greatly lowered.

The report went ahead to note that some of the transaction exchanges that had brought large amounts of traffic within the platform, was majorly due to the notion that the transactions for fees and dividends were made free, and from this, the transaction volume reported in a month has greatly dropped.

When looking at the compliance Fcoin is lagging behind, when we look at the development, plus, they have not been able to obtain the needed license, which is for the relevant regulatory agencies in the market.

One of the avenues that has proved to be instrumental is the exchange analytics services of the Crypto Exchange Ranks, as it has been able to successfully uncover the fake volumes that are present in the Asian platform. It is platforms like Coinbit, Fcoin, and the GDAC. The latest initiative that the company has been involved with is the launch of the crowdsourced framework that will be used in the crypto exchange transparency.

The CER platform has gone ahead to seek the help of the various transparency hackers. They have approached them in helping them identify and also track the cold and hot wallets of all the leading crypto exchanges in the market.

The CER dashboard has already been populated with the current wallet balances of the different major exchanges within the market. The platform has been designed in a very unique manner, as the results are easily filtered to much the size of the exchange wallet, and once you click on the wallet balance it will be able to reveal the distribution that exists between the cold and hot wallets.

The CER will not just stop here, as they hope to add the same information for all the exchanges within the market, and with this, it should be able to bring about great transparency within the sector.

BitMEX Develops Bitcoin ‘Derivatives’ Based On Price Movement For Investors To Bet Big On BTC

Crypto World products are gradually being designed Wall Street style with the latest talks revolving around Bitcoin futures. BitMEX is amongst the players that have capitalized on the lacking derivative market for digital assets given the lucrative nature of these contracts.

The firm’s parent company, HDR Global Trading Limited, has a license of operation from Seychelles given the country’s soft approach on regulating corporates. Its product is basically a perpetual swap that keeps track of the BTC-USD index; the ‘XBT-USD’. In one of his comments, the company’s CEO, Arthur Hayes, made a joke about his consumers being ‘degenerate gamblers’.

Basically, this project allows interested cryptopreneurs to place bets on the price movement of altcoins. The Bitcoin Mercantile Exchange (BitMEX) operates in Hong Kong where its regulations are minimal therefore allowing a large clientele to access their crypto derivative products. An example of these products is its futures contracts which creates a market for customers to interact via P2P trading and take different positions. At the moment, the services offered by BitMEX are available in 5 languages (Japanese, Korean, Chinese, Russian & English). Its platform transactions are settled via the leading crypto coin ‘BTC’.

BitMEX dates its launch back to 2014 when the firm started off its operations. The firm today prides itself as the leading liquid market for crypto derivatives especially for BTC; the company handles over $4 billion in transactions daily. A larger part of BitMEX product consumers come from North Asia, this is not surprising given the region’s aggressiveness in the blockchain & crypto industry.

Other exchanges that have tried to offer futures within the digital asset world include Cboe & Chicago Mercantile Exchange although both are largely regulated. This is a clear indication of why investors prefer BitMEX hence the large volumes transacted daily.

BitMEX Background

Arthur Hayes, founder of BitMEX, is a former employee of Hong Kong’s Deutsche Bank and a finance graduate of the Wharton Business School. His career began at the peak of the 2008 Financial Crisis which meant earning way lower than he expected. The young CEO later moved to Citigroup in 2013 but did not stay for long owing to downsizing that occurred in May that year. Arthur’s experience in the financial markets include working as a market maker for ETF’s, a fundamental in his crypto business today.

It was then that Arthur decided to join the Bitcoin bandwagon as the market was just gaining popularity. Most of Arthur’s profits back then involved arbitrage opportunities as the markets were yet to agree on a common price for the digital assets. In addition, Arthur traded in BTC futures that were available within Russia’s ICBIT platform where he also made some profits.

Arthur’s venture in crypto derivatives began not long after the 2013 encounter with Bitcoin. He approached two strategic partners in early 2014 in order to create BitMEX. The two fellows; Sam Reed and Ben Delo with whom Arthur launched BitMEX in November 2014 are web developer & high frequency trading analyst respectively.

According to a comment from Arthur, his experience in the corporate world taught him a lot that he has leveraged to the digital currency market. In his opinion, derivatives fall among the high income products in Investment Banking since no physical assets are involved for this contracts. Furthermore, consumers can increase their position through leveraging which in turn improves the profit making prospects for the market maker.

Statistics from Arthur’s company show a successful crypto market player; his revenue from 2017 show a hefty $83 million as told by Bloomberg. The CEO has also been spotted in a wavy Lamborghini as he attended one of the crypto events held in New York City, this is one of the signs of an accomplished crypto corporate.

The Crypto Derivative Arithmetic

Anyone who has interacted with derivatives has probably taken time to understand their complex nature. However, the product’s effectiveness in hedging for risk and speculative motives is highly ranked within financial markets. Arthur says that a good number of his company’s clients are retail investors that have a gambling mentality approach towards the crypto derivatives.

As of press date, the firm offers 8 different future contracts each representing a specific altcoin. Its main product ‘XBT-USD’ remains as the main sale point for the venture as most investors are interested in the BTC-USD index. It operates similar to a futures contract although its settlement design is quite different. Position holders are settled after every 8 hours while the leverage limit is set at 100x. This seems very lucrative although Arthur claims that most clients will only go up to 8.5x. Another product launched by BitMEX in Q3 is the ETH-USD perpetual swap, an altcoin Arthur is skeptical about.

If a client gets lucky, they can actually make huge profits from a swap position they had taken. However, the trick is at the leverage feature which increases a customer’s risk of loss greatly. For example; a client who uses the 100x leverage on one BTC could lose all of this equity if Bitcoin drops by $20 (0.5%). These are based on the house rules established by BitMEX for its derivative buyers.

One of the approaches by BitMEX today is capitalizing on new market entrants who don’t understand the trading design of its platform. The firm goes to the extent of sweeping all their equity once they find themselves in a losing position. As it stands, the firm has extended its oversight on margin blown accounts via a twitter bot @BitmexRekt.

BitMEX charges on transactions is another major pillar for the company’s revenue. They charge transactions on the total value of a deal as opposed to the principal amount; this is 0.075% for BTC and 0.25% for lesser liquid digital assets. The opening and closing of contracts are also counted as separate trades hence increasing the fees charged.

The project has often been compared to a gambling in a casino owing to the uncertainties involved with these positions.

Arthur Hayes defended his company arguing that its end game is different from that of casinos;

“It’s more like a game of poker. We take a slight rake, or trading commission, from matching trades, so technically speaking, it is not gambling because you don’t know that you’re going to lose money the second you step onto the platform.”

Insider Trading Queries

BitMEX’s crypto journey has not been free from controversy; one of the project’s questionable venture is introducing a market maker that is profit oriented. Ideally, the market maker should facilitate liquidity by placing bids and selling positions once they arise. Today’s technology has improved the effectiveness of this process with the use of bots.

A blog post written back in April 2018 highlights Arthur’s comments on creating a market maker for the company’s clients;

“In order to entice others to provide liquidity, we funded an entity that would quote as soon as a new product listed,”

he added that,

“As the product became more liquid, this entity would scale back its [sic] quotes and focus on another product with lower liquidity on the BitMEX platform.”

BitMEX’s in-house is currently run by Nick Andriany, a friend and former colleague of Arthur from Deutsche Bank. The subsidy is charged with handling on digital asset contracts and OTC with counterparties from all over the world. Anyone can take an UP or DOWN position in the available contracts but only the market maker is allowed to short sell according to the house rules set by BitMEX.

Arthur’s explanation of the firm’s payout design to winning customers is quite satisfactory. The BitMEX founder claims that the firm uses collateralized products which means the in-house market maker posts the total value regardless of a client’s premium. Despite its capital intensive nature, Hayes claims that this is the most efficient way to ensure funds are paid out.

When interviewed by Yahoo Finance, Arthur defended the in-house market maker from insider trading claims. The gentleman argued that the account held by this player was no different from other client’s accounts hence no privilege to information that might give them a competitive edge. Specifically, the trading desk is not involved with the books hence the stance taken by Arthur on this allegation.

In order to compensate for their highly exposed position, BitMEX’s market maker capitalizes the profits from the spreads between buy & sell prices. Hayes added that his firm’s in-house market maker also makes money from the fees charged for platform usage. He however was very clear that the market maker in BitMEX is focused on breaking even.

Just like other crypto projects, BitMEX is yet to solve traffic issues which often cause overloads within the hosting servers. The platform has been criticized for failing a couple times hence locking out clients from acting on a contract. One customer has attributed the loss of 43 BTC to this inefficiency while some clients have claimed BitMEX use these scenarios to place them on a favorable position.

The only sure way to get the fine print of BitMEX’s operations is an audit run by a 3rd party. This is subject to the firm’s obligation to disclosure of its information; BitMEX stands at a point of advantage on this as it has no such obligations as an entity.

Escaping Regulatory Jurisdiction

BitMEX is a fairly new firm though experienced in the crypto derivatives market. The firm could soon see its prospects change with the ongoing debate about digital assets especially in the U.S. Today, the regulators are yet to decide on which class of assets to classify crypto coins. Some have been put under commodities while other like XRP are under reg-D securities if sold within the U.S market. Therefore, regulation of these assets when traded in the U.S falls under the Commodity Futures Trading Commission (CFTC) and the Securities Exchange Commission.

The information above simply means that BitMEX would have to acquire registration from both regulators to access the U.S market. It is this reason that has forced the firm to exclude potential clients within the U.S.

Locking out prospective investors from strict countries like the U.S, Iran, Crimea and Syria has been an uphill task for BitMEX. The company blocks IP addresses from these countries, an approach that has some loopholes. Interested customers can simply get a virtual private network (VPN) which hides their original address. The information on how to crack this is already up on YouTube for American clientele.

BitMEX faces more challenges when it comes to KYC practices, this is Know Your Customer approach which is a fundamental of many business & financial laws all over the world. The target countries that implement these include Canada, the U.S and United Kingdom; all are prospective crypto zones despite the stiff regulations. Arthur Hayes believes that the KYC approach is time consuming hindering prospective clients that may increase the volumes greatly.

Going by history, setting up offices abroad has not stopped the U.S regulators from clamping down on crypto based companies. Back in 2015, Bitfinex was fined by the CFTC together with a Hong Kong crypto exchange counterpart; the two had offered margins without regulating. The most recent development is a joint pursuit of 1Broker by the SEC, CFTC & FBI. This Austria registered firm is currently being sort for violating KYC practices and breaching laws affiliated to security swaps.

BitMEX Future Prospects

Bitcoin’s bullish run at the end of 2017 raised the speculation ranges for the altcoin as we began 2018. Arthur Hayes is among the bullish predictors having said at one time that the digital asset would hit the $50,000 mark eventually. When asked about this given the unexpected crypto bloodbath, Arthur defended his position by saying it is within his obligation to make prediction regardless of the outcomes.

The young CEO is still ambitious on creating the most liquid market for digital asset derivatives despite the ongoing poor market performance. From the look of things, BitMEX is doing quite well having moved into a new office space in the expensive Hong Kong economic center. The firm currently pays for a rental space of $600,000 monthly shares the same skyscraper as Goldman Sachs, Barclays & the Bank of America.

Other indications that the firm is grown enough to engage with regulatory bodies include a move to hire Angelina Kwan, a regulatory expert. Kwan is a former employee of Hong Kong Exchanges and Clearing, a leading financial market globally. The new resource will act as the company’s Chief operating officer bringing in the expertise obtained from her career as a manager in the regulations compliance arena.

The journey will and has not been smooth for Hayes especially with the regulatory challenges. BitMEX will have to overcome that and other factors like decreasing demand based on the downtrend in cryptocurrency markets. All said and done, Arthur appears to be optimistic that the prospects will favor his business and accumulate what he possibly can till the fate of the industry is known.