Binance Reveals Plans to Launch a Libra-like Cryptocurrency

Binance, the largest cryptocurrency exchange platform in the world, has announced it is launching an open blockchain project “Venus” naming it an “independent regional version of Libra,” with the goal to develop localized stablecoins all across the globe.

According to an announcement published on August 19th, Venus is an open blockchain project to develop “localized” stablecoins and digital assets pegged to fiat currencies. It is further added that the exchange will leverage its existing infrastructure and experience with various regulatory regimes to reinforce a compliance risk control system and build a multi-dimensional cooperation network for the Venus project.

As Venus is an open blockchain project, Binance is currently seeking partners amongst governments, corporations and tech firms to create a new currency ecosystem that will “empower developed and developing countries to spur new currencies.”
The exchange stated that it “welcomes additional government partners, companies and organizations with a strong interest and influence on a global scale to collaborate with us to build a new open alliance and sustainable community.”

Notably, it appears that the exchange plans to use its Binance Chain to launch these stablecoins. Binance Chain has already issued several native asset-pegged stablecoins, including a Bitcoin (BTC)-pegged stablecoin (BTCB) and the Binance BGBP Stable Coin (BGBP) pegged to the British Pound.

Unlike the Facebook’s Libra, Binance will be encouraging collaborators to build directly on its proprietary chain – Binance Chain, which uses a “distributed proof of stake” consensus model, with transactions validated by a handful of entities close and “affiliated” with the exchange.

Meanwhile, the exchange stated it is well-positioned to launch such a currency ecosystem due to its existing public chain technology – Binance Chain – as well as its wide user base and already established global compliance measures.
Binance co-founder Yi He said:

We believe that in the near and long term, stablecoins will progressively replace traditional fiat currencies in countries around the world, and bring a new and balanced standard of the digital economy.”

Yi He further added that the exchange hopes to break the “financial hegemony” and reshape the world’s financial system, including allowing countries to have more tangible financial services and infrastructures, and protecting their financial security and increase the economic efficiency of countries.

The announcement follows as major companies including Facebook and Walmart have recently revealed plans to launch their own stablecoins.

Likewise, Facebook’s cryptocurrency project, Libra, has a similar structure, which intends to serve the unbanked and facilitate low-fee money transfers across the globe. Libra is expected to launch sometime next year.

Earlier this month, it has been reported that retail giant Walmart could also be working on issuing a USD-pegged stablecoin, similar to Facebook’s Libra cryptocurrency.

Coinbase Completes Acquisition of Crypto Custodian Xapo

Coinbase, one of the largest cryptocurrency exchanges, has just acquired the custody business of Xapo, an institutional business service best known for storing Bitcoins (BTC) in a vault under a Swiss mountain. The acquisition follows Coinbase’s plans to expand its custody services, and could eventually lead to the San Francisco – based exchange storing over 5% of all Bitcoins in circulation.

According to an announcement made on Thursday, Xapo has been acquired for $55 million which was enough to outbid another strong contender – custody giant Fidelity. The firm stated that the new acquisition will help expand the company’s custody business as well as increase the assets under custody up to more than $7 billion.

The news follows weeks of speculation over the exchange’s intentions with Xapo, seeing as Coinbase Custody had acquired in early August Xapo’s largest client – crypto-asset manager Grayscale Investments who at the time reported having $2.7 billion under management. This is considered to be one of the largest crypto transactions in history.

Xapo, which launched in 2013, is known for its wallet services including physical storage vaults for Bitcoin, based in Switzerland, which are used to store customers’ crypto assets in an offline environment to ensure the safety of private keys. Prior to Grayscale being acquired by Coinbase, the firm reportedly held $5.5 billion worth of cryptocurrency.

Following the acquisition, Xapo will hold onto its exchange business, which lets ordinary consumers buy and sell Bitcoin. Xapo founder, Wences Casares, has stated that he will maintain his long-time role of CEO. In addition to that, Xapo will keep possession of the vault and use it to store Bitcoins on behalf of its retail customers.

According to Casares the retail exchange business has always been Xapo’s main focus, and the custody business had been established as a side business at a time when wealthy Bitcoin investors needed a secure place to park their digital wealth.

 “In choosing Coinbase, we are confident that the Institutional Custody Business is going to a company that can provide great insurance, borrowing and investment alternatives,” said Casares. “We believe that Coinbase will take this opportunity to prove to our customers that they deserve their business.”

Meanwhile, the majority of Xapo’s largest clients have agreed to transfer their assets to Coinbase, giving the company control of over 514,000 BTC, currently worth $5.3 billion. If Coinbase manages to sign the remaining clients, then its custody service will have more than 860,000 bitcoin in total under custody, worth over $8 billion.

Coinbase CEO Brian Armstrong, has stated that ”custody is a critical step toward the institutionalization of crypto economy. It’s likely to start off small—maybe a few billion under custody—but it will grow quickly to a point that it’s a meaningful piece of stable, recurring revenue for the company.”

Prior to the acquisition in July this year, Coinbase Custody claimed to hold more than $2.5 billion worth of crypto from roughly 100 institutional clients.

Coinbase’s new custody services will include regulatory support and insurance, as well as staking, which extends to a sort of proxy voting service for cryptocurrencies that have built-in voting mechanisms.

“Fundamentally, we have to help our investors earn a return on their assets. You can imagine lending out Bitcoin and earning interest on that,” said Coinbase Custody CEO Sam McIngvale.

In the meantime, Coinbase isn’t the only company trying to get into the custody space. Earlier this year, startup Anchorage announced $40 million in backing from finance giant Visa as it seeks to lure in more institutional clients. Meanwhile, Palo Alto-based BitGo is also said to be competing to be a player in the custody space.

Blockchain Firm Settles Unregistered ICO with the SEC

SimplyVital Health, Inc. – a healthcare- based blockchain firm – has settled with the United States Securities and Exchange Commission (SEC) over an allegedly unregistered $6.3 million initial coin offering (ICO).

According to SEC, the New England-based SimplyVital Health, Inc. planned to create a healthcare-related blockchain ecosystem, dubbed Health Nexus. The firm publicly announced plans to build its platform through the sale of its Health Cash (HLTH) token in 2017. Based on the charges brought by SEC, the commission alleges that the company raised more than $6 million through a pre-sale of its token.

Notably, the pre-sale was offered under a simple agreement for future tokens (SAFTs) arrangement – a model which is designed to simplify the ICO process and reduce the risk of enforcement actions by offering investment contracts rather than tokens. Following the pre-sale, which closed in April 2018, the firm did not move forward with the planned public offering.

Respectively, SimplyVital made use of the SAFT arrangement that stipulated tokens would not be dispersed to investors until SimplyVital created its platform. However, following the pre-sale, which closed in April 2018, the firm did not move forward with the planned public offering.

Subsequently, SEC concluded that the blockchain healthcare company had violated provisions of the Securities Act of 1933 and “did not file a registration statement with the Commission or qualify for an exemption from registration before offering and selling HLTH to the public through the SAFTs.”

Following this, SimplyVital, whilst neither admitting nor denying the SEC’s charges, has agreed to comply with SEC’s cease and desist order and will face no further penalty, as the firm had already returned to investors “substantially all of the funds raised during its pre-sale” by April 19th 2019.

According to industry sources, many had reported in 2018 that the SEC was most likely going after SAFT sales. An unnamed source stated at the time:

“The SEC is targeting SAFTs. The new approach of the SEC is to consider tokens as both utility and security at the same time, meaning a token can bring utility to a platform but at the same time can be considered as a security if you sold it to parties that mainly looked for profit on its increase in value.”

After releasing its July 2017 DAO Report of Investigation, which introduced the crypto industry to the Howey Test, the SEC has efficiently followed a consistent pattern of enforcement, which has been laid out over the last two years, and picked off one ICO after another over the unregistered sale of securities.

In public statements, Chairman Jay Clayton has stated that the SEC believes virtually every ICO ever conducted in the United States has violated federal securities laws.

Most recently, it had been reported that a U.S. District Court authorized an emergency freeze to lock up $8 million raised in an ICO by a New York citizen alongside with two of his entities. Seemingly, the SEC claimed that Reginald Middleton, Veritaseum Inc. and Veritaseum LLC had raised the funds in an ICO that was a fraudulent, unregistered securities offering.

Coinbase Switches Banks from Barclays to ClearBank in the UK

Barclays – the British multinational investment bank and financial services company – has reportedly ended their relationship with U.S. cryptocurrency exchange platform Coinbase.

According to industry sources, the London – based bank, is no longer providing banking services to Coinbase ending a relationship that started in March last year as the exchange expanded in Europe.

The news has caused unwarranted disruption, such as Coinbase users having reportedly been indirectly affected. The rare deal between the exchange and the bank gave its UK customers access to the Faster Payments Scheme (FPS) which allowed users to directly deposit and withdraw pounds into their exchange accounts.

However, the news of the split up has already slowed UK deposits and withdrawals, which now take days to process. The US exchange platform has already found a replacement UK banking partner in ClearBank.

ClearBank is one of the U.K. challenger banks that have come up on the radar in recent years to compete with market incumbents. ClearBank is expected to restore Coinbase’s FPS access by the end of the third quarter.

The reasons for the separation of Barclays and Coinbase are not clear. Currently, Barclays, ClearBank and Coinbase have all declined to comment on the matter.

However, one unnamed source claimed that the Barclays-Coinbase relationship was simply a pilot program that had run its course. The source further added that Barclays has probably held Coinbase back, preventing it from listing certain coins and tokens.

A CEO of a U.K. crypto company who chose to remain nameless has also voiced his opinion on the saying, citing:

“It is my understanding that Barclays’ risk appetite has contracted a little – I’m not sure exactly why or what’s been driving that, maybe there has been some activity they are not happy with. But it’s about Barclays’ comfort level with crypto as a whole.”

Coinbase first secured a bank account with Barclays in early 2018 and by August it already began rolling out support to let UK customers buy and sell cryptocurrency in Pounds sterling. The exchange had also been granted an e-money license by the U.K. Financial Conduct Authority (FCA), making it to be the first crypto platform to gain access to FPS.

Meanwhile, earlier this week, Coinbase delisted Zcash – a privacy-centric cryptocurrency, which uses a technology called zero-knowledge proofs to hide details of transactions from blockchain watchers. According to sources, the decision was made in accordance with Clearbank’s wishes, as it was uncomfortable indirectly supporting a currency with features that make law enforcement’s job harder.

ClearBank is also working with FCA-regulated crypto broker BCB Group. Most recently, the broker announced a deal to bring Luxembourg-based exchange BitStamp onto Faster Payments for the sterling pound.

Although, Barclays has taken the decision to take less risks when it comes to crypto, the global bank still provides operational banking services to Blockchain, the U.K. wallet provider which recently announced plans to move into the exchange space with its super-fast PIT trading service.

SEC Delays Three Bitcoin ETF Proposals Again

The United States Securities and Exchange Commission (SEC) announced that it delays its decision on three Bitcoin (BTC) exchange-traded fund (ETF) proposals.

The ETFs, proposed earlier in the year came from Bitwise Asset Management, VanEck/SolidX and Wilshire Phoenix, and filed with exchanges NYSE Arca and Cboe BZX. The applicants are hopeful that there will be some progress on the ETF front hoping to become the first asset manager to offer a regulated investment vehicle based on Bitcoin.

The SEC decision for listing VanEck has been delayed to October 18, while Bitwise’s proposal on NYSE Arca will know its fate on October 13. The Wilshire Phoenix’s United States Bitcoin and Treasury Investment Trust will be the most recent decision announcement on September 29. The SEC shared the same statement for each of them:

“The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change.”

Exchange traded funds (ETF) are a type of security that tracks a basket of assets proportionately represented in the fund’s shares. The SEC approval is highly anticipated by the community, as this would make Bitcoin exposure for institutional investors much more accessible.

The VanEck proposal was filed in January, while Bitwise’s current application was filed in February. The Wilshire Phoenix proposal was published on July 1, 2019. Attempts for Bitcoin ETF approvals have been consistently rebuffed by the SEC over the last couple of years, the main reason being fear of market manipulation that can’t be monitored by the agency.

Today’s news marks the latest in a series of delays on a Bitcoin ETF. The SEC had previously delayed its decision on VanEck and Bitwise’s ETF applications in March, and again in May.

Following the May decision, the SEC decided to publish a set of questions, available to the public, in order to gather more information and opinions about VanEck’s proposal.

The SEC has the right to postpone its decision (usually up to 3 instances) on proposed financial products in order to gather information or further analyze a rule change that would allow the listing.