Binance and Paxos Launch NYDFS-Approved Stablecoin

Leading crypto exchange Binance has announced its partnership with digital asset trust company Paxos to launch a USD-pegged stablecoin.

According to the announcement made on Thursday, the two companies will launch a USD-pegged stablecoin called Binance USD (BUSD). The stablecoin has already received the approval of the New York State Department of Financial Services (NYDFS) and will be available for trading later this month.

Paxos co-founder and CEO Asia Rich Teo has stated that the NYDFS’s approval of the stablecoin is a vital step towards long term stability in global crypto markets. He further added:

“We are proud that our stablecoin as a service offering enables trusted companies like Binance to introduce products customized for their users. The Paxos brand symbolizes regulatory integrity, consumer protection and transparency for all of our partners.”

The upcoming stablecoin will be backed by U.S. dollar on a 1:1 ratio. In addition to that, a Binance spokesperson stated that the BUSD will be built on the Ethereum blockchain, however it may move to Binance Chain in the future.

The coin will start trading on Paxos’ and Binance’s exchange platforms later this month. Paxos will issue the coin and look after the reserves of dollars–and Paxos customers will be able to directly purchase BUSD tokens through the company’s wallet using either U.S. dollars or PAX, its own stablecoin.  Binance users will likewise be able to trade BUSD on the platform.

BUSD will trade against three cryptocurrencies – Bitcoin (BTC), Binance coin (BNB) and XRP – on the platform. According to the announcement, Paxos will act as both the custodian and the issuer for the stablecoin, and will regularly audit the dollar holdings.

Binance CEO Changpeng Zhao, commonly known as “CZ”, stated that Paxos is leading the digital trusts space and further added that Binance is excited to work with them in developing their native stablecoin.

“We hope to unlock more financial services for the greater blockchain ecosystem through the issuance of BUSD, including more use cases and utility through the power of stable digital assets.”

Following this news, BUSD joins the Paxos Standard and the Gemini Dollar as an NYDFS-approved stablecoins.

Meanwhile, Binance has been steadily showing interest in stablecoins. The exchange previously announced its intention to issue stablecoins worldwide as part of its Venus project. Back in July, it listed BGBP stablecoin, which is pegged 1:1 to the British pound, however is built on the Binance Chain blockchain network. At the time, the company said it would launch a collection of stablecoins pegged to different fiat currencies.

JEX is Binance’s Latest Acquisition to Offer Derivative Trading Services

Leading cryptocurrency exchange Binance has announced its newest acquisition – JEX, a Seychelles-based crypto-asset trading platform that offers spot and derivatives trading services.

The news was communicated in a press release, citing “JEX will join the Binance ecosystem as Binance JEX and focus on further building the crypto-asset derivatives market.

JEX is a company that specializes in cryptocurrency-related derivatives products such as options and futures contracts. Following the acquisition, the firm will be rebranded as Binance JEX and it will keep its existing team intact. Meanwhile, Binance will introduce more utility to the JEX token and will provide Binance users with additional professional services such as futures contracts, options, and other derivatives products.

It is further noted that in a longer-term, JEX tokens will be distributed gradually to all users through marketing activities as well as community incentives. However, the tokens will be ultimately retrieved and burned in different forms including trading commission deductions.

This new acquisition follows Binance’s continuous interest in the derivatives market. Most recently, the exchange platform has added a new service to its range, specifically margin trading and has shown interest in pursuing offering options and futures trading.

Binance co-founder Yi He has stated that JEX developed solid derivatives product offerings, which are consistent with Binance’s product roadmaps in the crypto-asset derivatives market. He further added:

“We hold an open mind and welcome more partners to join the Binance ecosystem. We look forward to delivering more innovative derivative products in the future as Binance JEX.”

Subsequently, Binance noted that new financial products will launch in September. The exchange platform has also unveiled two futures testnet platforms – Futures A and Futures B –which will allow users to conduct a simulated trading competition. After exploring the platforms, users will be asked to vote for their favorite futures testnet and get the chance to win 10,000 Binance Coin (BNB).

“We think open competition is a great way to test out the products’ usability. Through the competition, we hope to fully review the two products in terms of market feedback, scalability, and liquidation model design. It’ll help with the ultimate decision making,” said a Binance spokesperson.

The spokesperson further explained that the exchange aims to address current common issues afflicting the market, such as high latency, overloads, and poor risk-control mechanisms, which are reportedly some of the problems faced by BitMEX.

Meanwhile, just last week it had been reported that Binance CEO Changpeng Zhao announced that the platform was planning to launch futures trading this month. Two days prior to this, the exchange had announced the launch of its first crypto lending product, allowing users to earn interest from Binance Coin (BNB), Tether (USDT) and Ethereum Classic (ETC).

Alan Howard Behind the $1 Billion Crypto Hedge Fund

Elwood Asset Management, a UK-based investment firm owned and founded by hedge-fund billionaire Alan Howard, is planning to launch a $1 billion venture in the cryptocurrency hedge fund space, according to a report published by The Financial Times on August 30th.

Elwood Chief Executive Officer Bin Ren disclosed to the Financial Times that the firm was working on a platform that would tailor portfolios of cryptocurrency funds for institutional investors.

According to the report, the new platform aims to address the volatility and security risks often associated with the crypto hedge funds. CEO Ren claimed that the objective was to provide investors with a selection group of vetted crypto funds have passed robust due diligence so that market participants can avoid “blow outs.”

Whilst the details of the new venture have yet to be finalized, it is noted that the platform would allow investors to specify their terms such as the risk level they are willing to take, the returns they expect, as well as their liquidity terms. In addition to that, it will also determine the potential correlation with other assets owned by the investors. As a result, investors will get portfolios specifically tailored to their needs.

Besides the fees the investors need to pay to access the underlying funds, they would also have to pay a certain fee to Elwood for using the new platform.

“I see this as a very big growth opportunity,” Ren said, adding that the new platform-style product could ultimately manage over $1 billion of assets.

Meanwhile, Elwood has been screening crypto hedge funds and has already identified up to 50 that “probably satisfy our due diligence.”

The new platform builds on Elwood’s previous work in the crypto space. Earlier this year, the investment firm launched the Elwood Blockchain Global Equity Index. The index, which is calculated by index provider Solactive AG, stimulates investment into both crypto and blockchain projects.

Elwood had also indicated it was planning to increase its cryptocurrency offerings as it announced the launch of a blockchain exchange-traded fund in partnership with Invesco, which would be listed on the London Stock Exchange.

Last month, Invesco Japan launched the Japanese domestic ‘Invesco Global Blockchain Equity Fund’, offering Japanese investors exposure to digital assets and blockchain technology. The fund will track the performance of the Elwood Blockchain Global Equity Index.

Prior to this, there had been other reports that also suggested Elwood was planning to launch a range of cryptocurrency products targeting institutional investors. Moreover, Alan Howard himself has a host of crypto investments under his belt, including in EOS developer Block.one as well as the ICE-owned digital assets platform Bakkt.

The new venture follows other billion-dollar-plus investments in the space. For reference, Telegram’s blockchain, TON, which is expected to be released in the coming months, raised over $1.7 billion.

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.