Germany: Proposed Bill Set to Introduce Cryptocurrencies at Local Banks

Cryptocurrencies might get the same treatment as fiat money in Germany. A newly introduced bill hints at authorities looking to allow German banks to sell cryptocurrencies and provide custody solutions.

According to local news agency Handelsblatt the new bill was proposed for voting in the Bundestag, the German parliament and has seen positive reception. Now, it requires consensus across the country’s 16 federal states to be successfully implemented.

As it stands, banks and financial institutions are restricted from allowing transactions related to cryptocurrencies for clients. The proposed legislation, if approved, will make a monumental difference for cryptocurrency availability in the country.

If the states agree upon the legislation, German citizens will be able to buy and hold Bitcoin, Ethereum, along other cryptocurrencies directly with their banks. The whole spectrum of banking services might be available for cryptocurrencies as well.

Banks have been eager to get into the cryptocurrency industry as the interest for digital currencies seems to be mounting both from consumers as well as governments and corporations. The bill is set to be implemented in 2020, as Handelsblatt outlines:

“​​Starting in 2020, financial institutions will be able to offer their customers online banking, virtually at the touch of a button, along with classic securities such as stocks and bonds, as well as cryptocurrencies.”

The new legislation has seen wide support and enthusiasm from the domestic industry. The Association of German Banks — a major lobbying group representing over 200 financial institutions — is a huge advocate of the bill, arguing that established financial institutions have the experience and risk mechanisms in place to safeguard client assets.

In October, the Association released a paper arguing that the European economy may benefit from a programmable digital euro.

At the same time, there have been mixed signals towards cryptocurrencies from various governments. The Bundestag has recently shared an opinion that cryptocurrencies such as Bitcoin are not real money, citing their volatility and allegedly limited use for payments. Concurrently, nation states have been quick to dampen the development of Facebook’s stablecoin, fearing a potential disruption of the existing monetary system.

The European Central Bank has also been stringent on digital currencies, stating that global stablecoin payments raise potential risks across a broad range of policy domains, which is the primary objective of a central bank.

Singapore Financial Watchdog Proposes Crypto Derivatives on Local Exchanges

Singapore’s central bank and financial regulator – the Monetary Authority of Singapore (MAS) – has announced a new proposal, which will allow the listing and trading of cryptocurrency derivatives on approved local exchanges.

According to a statement released on November 20th, the proposal would subject the trading of derivatives tied to cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) to the city-state’s Securities and Futures Act.

Singapore’s financial regulator has stated that plans to extend its remit to crypto derivatives have been spurred by interest from institutional investors such as hedge funds and asset managers, in trading “payment tokens” like BTC and ETH, who “have a need for a regulated product to gain and hedge their exposure to the payment tokens.”

The MAS has further added in a consultation paper on the proposal that:

“A well-regulated market for derivatives – particularly one anchored by institutional investors with sophisticated risk management and investment strategies – can serve as a more reliable reference of value for the underlying asset.”

So far, four exchanges have been approved by the MAS, which include Asia Pacific Exchange, ICE Futures Singapore, Singapore Exchange Derivatives Trading and Singapore Exchange Securities Trading Limited.

Notably, the public has until December 20th to submit comments to the MAS regarding the proposal.

Meanwhile, crypto derivatives have long since gained traction in the United Stated. For instance, derivatives exchange giant CME Group has been offering bitcoin futures since 2017. Up until now, it has traded nearly 7,000 futures contract on average per day. CME has also been preparing to launch BTC options in January.

Bakkt, a subsidiary of Intercontinental Exchange (ICE), also provides physically-settled bitcoin futures contracts and is planning to offer a cash-settled version of the product due to customer demand. Likewise, Bakkt is also planning to launch its options contracts soon through ICE Futures Singapore.
However, derivatives products are a particular concern for regulators that seek to protect investors, and MAS has stated it considers crypto derivatives not suitable for retail investors. Therefore, the MAS stands by its proposal to only regulate futures traded on exchanges it already regulates.

“The underlying payment tokens tend to exhibit high volatility and are intrinsically difficult to value. … Losses also amplified due to the leveraged nature of derivatives, and investors may even lose more than the whole amount they had put in,” stated the MAS.

SEC to Review Rejected ETF Proposal from Bitwise

The United States Securities and Exchange Commission (SEC) is reviewing its decision on the Bitcoin (BTC) exchange-traded fund (ETF) proposal submitted last month by Bitwise Asset Management and NYSE Arca. At that time, the financial regulator cited fear of market manipulation and fraudulent activities as the reason for rejecting the ETF.

According to an official announcement on November 18th, the SEC has made a decision to revisit is ruling on the ETF proposal filed by the Bitwise Asset Management and NYSE Arca. Previously, the commission had rejected the ETF on the grounds that it did not meet the necessary requirements, highlighting the risks that the ETF poses for the market as well as for investors.

At that time, SEC explained:

“The Commission is disapproving this proposed rule change because, as discussed below, NYSE Arca has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section6(b)(5), and, in particular, the requirement that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices.”

At the time that Bitwise’ ETF was rejected, Bitwise tweeted that “though ‘disapprove’ doesn’t seem positive, this is a productive step in the journey toward a regulated crypto ETP.”

However, it remains unclear as to why the commission has decided to review its decision. Nevertheless, SEC commissioners have the possibility to review decisions following the filing of a petition, or at their own discretion.

Bitwise’s head of research, Matt Hougan, has denied that the company submitted a request for a review, explaining that it was not seeking to overturn the commission’s decision, however the company remains open to dialogue and welcomes the opportunity to submit comments.

Following this, any party or person may file a statement in support of, or in opposition to, the action made pursuant to delegated authority, no later than December 18th, 2019.

Until then, the order to reject the proposed listing of the ETF filing from Bitwise Asset Management and NYSE Arca will remain in effect pending the Commission’s review.

Previously, the SEC reviewed the rejection of the Bitcoin ETF application submitted by Cameron and Tyler Winklevoss, founders of the Gemini exchange; after more than a year passed the rejection was ultimately upheld.

The review of the Bitwise application could result in a similar outcome. Indeed, a number of experts have speculated that years may pass before the SEC would consider approving an ETF application.

Meanwhile, the SEC has yet to approve an ETF proposal. Currently, ETF veteran Kason Toussaint and Kryptoin Investment Advisors are waiting for SEC’s decision on their own proposal, which was submitted a couple of months ago. Accordingly, the ruling is set to be made next month.

Bitcoin Suisse Partners European Payment Provider Wordline to Bring Crypto Payments

The largest Swiss-regulated financial intermediary and pioneer in crypto-financial services – Bitcoin Suisse – has just announced its partnership with European leader in payments and transactional services provider Wordline.

Recently announced, Bitcoin Suisse and Wordline have signed a letter of intent for a partnership that will provide cryptocurrency payment services to Swiss merchants and consumers both in-store and online.

As one of the oldest and largest crypto financial services provider, Bitcoin Suisse has developed extensive in-house technical and crypto-financial expertise through its more than 6 years of experience in trading, brokerage and storage for cryptocurrencies.

According to the reports, the main goal of this partnership is to augment the existing payment service network of Worldline with cryptocurrency payment capabilities as well as promote and encourage the adoption of cryptocurrency on a larger scale across a wide range of businesses and industries. Further details about the partnership will be revealed at the upcoming Swiss Payments Forum in Zurich.

Upon the announcement, Dr. Arthur Vayloyan – CEO of Bitcoin Suisse – commented:

“Our partnership with Worldline is an incredible step forward on the journey to bring crypto payments into broader adoption. Bitcoin Suisse is proud to serve as the processor of cryptocurrencies in Worldline’s payment service system. We applaud them for their pioneering spirit in taking this monumental step and pointing the way forward for others.”

As noted in the press release, the new system will be available for all users on SIX Payment – Worldline’s nationwide payments infrastructure. Currently, there are 65,000 Swiss merchants who are using the SIX Payment Services. Equipped with cryptocurrency payment capabilities, the traditional network will be expanded to promote the use of the new asset class at a mass scale, in-store and online.

In addition to that, it is noted that the service will be intuitive and easy to use for both staff and consumers. Payouts to merchants will be made in Swiss francs or Euros and the transaction figures will be fully integrated into the merchant reports like any other card or wallet.

Marc Schluep, CEO of Worldline in Switzerland, added that as a market leader, the company had a reputation to introduce latest payment functionalities that boost the customer journey as well as increase efficiency and profitability for its merchants. He further stated that due to the new partnership with Bitcoin Suisse, their client base could benefit from an entirely new offering without taking any conversion risk.

In the event of a successful launch in Switzerland, Worldline will roll out its new cryptocurrency payment service across Europe.

Meanwhile, this partnership aims at strengthening the leading position of Switzerland and as a result establishing the country as a strong center in the crypto-financial services industry. Nonetheless, there are currently over 800 companies developing blockchain solutions or providing services to crypto and companies in Switzerland.

Bakkt Launches Custody Solution for Institutional Investors

Bakkt, the institutional Bitcoin (BTC) trading platform backed by Intercontinental Exchange, has announced on Monday the launch of its custody feature for its entire client base.

The news was shared in a blog post on November 11th by Bakkt, confirming that it had received regulatory approval from the New York Department of Financial Services (NYDFS) to offer custody services to any institution. Prior to this, this feature was only available for those trading its BTC futures.

The news came just weeks after the company said it would begin offering options on top of its existing BTC futures contracts, which in turn came less than a month after the company went live with its long-anticipated physically delivered offerings.

The new service provides is an extension of the company’s Bakkt Warehouse and will offer bitcoin custodial services to institutional investors. At the moment, several companies have signed on as initial customers for Bakkt Warehouse, including Pantera Capital, Galaxy Digital and Tagomi. Other marquee firms are expected to join in the next few weeks.

Following the release, Bakkt COO Adam White has claimed that the company believes that the custodial feature is a critical link in the institutional adoption of bitcoin is custody.

The blog post further noted that:

“Safely storing digital assets demands a comprehensive approach to custody. Institutions and sophisticated investors need more than cutting-edge technology. They require proven infrastructure, robust operational controls, and independent oversight.”

White further added that whilst technology provided the foundation by which the company stored customer funds, “the Bakkt Warehouse employs extensive physical, operational and cybersecurity safeguards too.”

He noted that due to the relationship between Bakkt and Intercontinental Exchange allowed them to uniquely address client needs in the digital asset custody space, including on-premises data centers and dedicated network connectivity between operational sites,that remove the need to rely on third parties.

According to Bakkt, the new tool will employ a range of security and safeguards, such as redundant secondary facilities, geographically-distributed signing operations, as well as independent reporting structures amongst others. The company is currently working with BNY Mellon to support its geographically separated key storage feature.

In addition to that, the company will also protect its systems with 24 hour video monitoring, armed guards, and security operations and incident response teams. The trading platform has also secured its SOC2 certification – a review of its systems by a third-party auditor.

Although a number of other companies are currently developing their own platforms for physically-settled bitcoin futures in the U.S., Bakkt has been the only one to launch so far.

In the meantime, Bakkt has also recently announced its plans to launch a cryptocurrency consumer app and merchant portal – Starbucks – which would launch in the first half of 2020 with Starbucks.

Meanwhile, Bakkt Warehouse is entering a market with a fair amount of competition, including Fidelity Digital Assets, which fully rolled-out its platform in October. Another market competitor is Coinbase Custody, which launched in 2018 and now manages over $7 billion thanks in part to its acquisition of Xapo’s institutional business.