The cryptocurrency craze is moving forward in fits and starts as industry participants wait to see how it will end.
The bitcoin cryptocurrency rollercoaster is roaring ahead as regulators come to grips with instruments based upon it, some trading venues advance instruments as other venues move into limbo, and the price of the virtual currency is under constant scrutiny.
The only thing more erratic than bitcoin’s rise and fall and rise was the brinksmanship around the shutdown of the federal government of the U.S.
In fact, the federal government has been stepping forward into the bitcoin fray.
Stephanie Avakian and Steven Peikin, the co-enforcement directors for the SEC, and James McDonald, the enforcement director for the CFTC, are reassuring the industry that they are ready to take on fraud committed via cryptocurrency.
“When market participants engage in fraud under the guise of offering digital instruments — whether characterized as virtual currencies, coins, tokens, or the like — the SEC and the CFTC will look beyond form, examine the substance of the activity and prosecute violations of the federal securities and commodities laws,” according to a joint statement from the regulators, dated Jan. 19. “The Divisions of Enforcement for the SEC and CFTC will continue to address violations and bring actions to stop and prevent fraud in the offer and sale of digital instruments.”
Bitcoin Futures & Settlement
Amid the bitcoin blizzard, officials of the exchange holding company Cboe Global Markets announced on January 17 the settlement of a U.S. bitcoin futures instrument offering that was launched December 10 under the ticker symbol XBT, and available via the Cboe Futures Exchange (CFE). The CFE offers price discovery, liquidity and centralized clearing. The marketplace targets participants that want to trade “based on their view of bitcoin prices, gain exposure to bitcoin prices or hedge their existing bitcoin positions,” officials say.
In addition, XBT futures are described as cash-settled contracts based on the Gemini Trust Company’s auction price for bitcoin, denominated in U.S. dollars. Gemini is a digital asset exchange and custodian founded in 2014 that allows customers to “buy, sell, and store digital assets such as bitcoin, and is subject to fiduciary obligations, capital reserve requirements, and banking compliance standards of the New York State Department of Financial Services,” Cboe officials add.
“The settlement price was $10,900.00, as determined by the 4:00 p.m. ET Gemini1 Exchange bitcoin auction,” officials say. “Cboe XBT futures, the first regulated futures of their kind, launched on December 10, 2017, and a total of over 124,000 contracts have traded across expiries since, representing a notional value of over $1.5 billion. The contracts, which are cash-settled, were specifically designed to allow participants to implement straightforward trading strategies through settlement to a single, tradable auction price as calculated by Gemini.”
“Our regulated market experienced a smooth operational close and the settlement process worked as designed,” according to Ed Tilly, chairman and CEO of Cboe Global Markets, in a statement. “This is an encouraging initial milestone, and we look forward to working with customers to power the growth of this nascent market.”
Cboe Global Markets has its headquarters in Chicago, and has offices in Kansas City, New York, London, San Francisco, Singapore, Hong Kong and Quito, Ecuador.
Bitconnect Disconnects
While one venue for bitcoin-based instruments is moving ahead, another one, the controversial Bitconnect system, announced on Jan. 16 that it was halting activity via its lending and exchange platform. The site allowed participants to loan their cryptocurrency to Bitconnect in exchange for much-anticipated big results.
“This is to inform all community members that we are closing the Bitconnect lending and exchange platform,” according to an online posting via the company. “We are closing the lending operation immediately with the release of all outstanding loans. With release of your entire active loan in the lending wallet we are transferring all your lending wallet balance to your BitConnect wallet balance at 363.62 USD. This rate has been calculated based on last 15 days’ averages of the closing price registered on coinmarketcap.com. You are free to withdraw your BitConnect coin currently in QT wallets that was used for staking as well. We are also closing BCC exchange platform in 5 days [by Jan. 23]. In short, we are closing lending service and exchange service while BitConnect.co website will operate for wallet service, news and educational purposes.”
BitConnect officials say the reasons for the hiatus include:
- “The continuous bad press has made community members uneasy and created a lack of confidence in the platform;”
- “We have received two Cease and Desist letters, one from the Texas State Securities Board, and one from the North Carolina Secretary of State Securities Division. These actions have become a hindrance for the legal continuation of the platform.”
- “Outside forces have performed DDos attacks on platform several times and have made it clear that these will continue. These interruptions in service have made the platform unstable and have created more panic inside the community.”
It’s not clear if closing the lending and exchange platform will put an end to the enterprise as officials say that their action “doesn’t mean that we will stop supporting BitConnect coin. Closing the lending platform will allow Bitconnect to be listed on outside exchanges giving more options for trading.”
The backers of the effort “will keep working to make BitConnect coin available to merchant websites providing them API access to accept BitConnect Coins on their platforms,” according to Team BitConnect. “BitConnect X ICO is still functional and we are building an exchange platform on the BitConnect X website. With BitConnect X operating as an exchange platform, BitConnect Coin (BCC) will be listed there. This is not the end of this community, but we are closing some of the services on the website platform and we will continue offering other cryptocurrency services in the future.”
Amid the industry activity, the price of a bitcoin came in at $10,693 at 3:15 PM EST on Monday, January 22, according to the OnChainFX website.
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