A Decentralized Binance, Malta's Hail Mary, and the SECs Long Reach

Monday, October 1st

☕️Happy Monday, and welcome to October. Fall is officially here, and we’re a few months away from entering cryptos historically favorite season, winter :)

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3 things you need to know:

One: Binance is aiming to have a decentralized exchange live by early 2019

A functioning and usable decentralized exchange (DEX) is the Holy Grail of cryptocurrency. It’s not clear what the decentralized Binance will look like, but if Binance’s track record is any indication — it’ll be a good product.

CZ Binance@cz_binance

Just had a productive meeting for #Binance #DEX (decentralized exchange), where $BNB will be native gas, and the exchange don't control user funds. Aiming for a public beta end of the year/early next year. Yes, we work on Saturdays, non stop!

September 29, 2018
CZ himself has been quoted on many occasions claiming that decentralized exchanges are the future, as they allow for a trustless trading experience (read: no more exchange hacks). One of the biggest advantages of a decentralized exchange is the ability to act as your own custodian, and the lack of fees due to the decentralized infrastructure.

  • Fees can still be collected, and many decentralized exchanges still have fees as a way to pay developers to incentivize them to work on a platform.

  • BNB demand will be driven up when the exchange launches, as CZ plans to switch BNB from an ERC-20 token to it’s own chain and give it the ability to act as “gas” for the new, decentralized Binance.

Why this matters: Exchange issues are commonplace, with lost funds being the #1 worry of most cryptocurrency investors. There has been a lot of work surrounding a stable and secure custody solution for cryptoassets, and many cold store solutions (like Coinbase Custody and BitGo) have popped up. The one thing missing is the ability to trade with those securely stored assets. It’s a huge hassle to both store assets securely and move them efficiently. In fact, it’s impossible to do so right now. A well done DEX would solve many of these issues by allowing people to trade assets while retaining custody of those assets, and not trusting a third party to execute on their behalf.

Go further: Watch the Binance DEX Demo

Two: Malta's Prime Minister Tells UN That Crypto Is the 'Inevitable Future of Money'

The Maltese PM, Joseph Muscat, voiced strong opinions on the future of blockchain, telling the UN General Assembly in NYC last week:

“I passionately believe technology revolutionizes and improves systems. This is why in Malta, we have launched ourselves as the blockchain island. By being the first jurisdiction worldwide to regulate this new technology that previously existed in a legal vacuum. Blockchain makes cryptocurrencies inevitable future of money. More transparent it helps filter good business from bad business.”

This resounding claim follows an incredible amount of work Malta has done in the blockchain space. They have:

Be smart: Cryptocurrency and blockchain present a rare opportunity for small countries like Malta, Gibraltar, Cyprus and others to punch far above their weight. By introducing crypto-friendly legislation, they are able to draw in talent, capital and business that would otherwise be lost.

Malta is a small country. They have the ability to move quickly and have outmaneuvered larger countries that are unable change laws swiftly. It is in their best interests for cryptocurrency to succeed — and that fact (more than true belief in the future of crypto) is likely the root of their bullishness.

Go deeper: Watch the speech

Three: TechCrunch Co-Founder, Michael Arrington, pivots his hedge fund to Asia after SEC subpoena

Unlike Malta, the U.S government is taking a slow and steady approach towards cryptocurrencies.

Michael Arrington@arrington

We received a second subpeona from the SEC, again collecting information from us as investors in a U.S. company. The legal costs of dealing with these are not insignificant. We will not invest in any further U.S. deals until the SEC clarifies token rules. Pivot to Asia.

September 28, 2018
In the process, it’s alienated many entrepreneurs who have found it difficult to operate in a unclear regulatory environment. Arrington later clarified his tweet, saying:

What I’d really like to see is no regulation. But if we’re gonna have regulation we need to have it right and the SEC needs to make their move, they’re moving super slow. What I’d rather do is make rules, they can change them over time, at least so we know what the rules are. That’s my biggest concern.

“We have a few good U.S. investments,” Arrington said of his $100 million Arrington XRP fund. “But 80-90 percent of our investments are in Asia, Europe and Israel right now because they are actually countries where there’s enough regulatory certainty that entrepreneurs feel safe starting token or blockchain companies there.”

Unclear regulation has lead to a few issues:

Also in the news:

Market Outlook:

Quick Take

Direction: We’ve slowly broken down past support levels, and are making lower highs. Bollinger band width is the tightest it’s been since September 2017, indicating a big move is coming soon. Taking into account overall market sentiment, low volumes, and weak market structure, it’s more likely that we have a large break down in the coming days than a break up.

Key Support:  6520, 6440, 6300

Key Resistance: 6620, 6700

Actions: I’m net short BTC, and moving over some alt positions into USDT for now. Will flip to a long position on a break of 6700 with volume.

Fear & Greed

F&G is almost greedy, indicating that further downside is more likely than a bounce.

Here’s a reminder of what these criteria mean

CoinSavage: Truth in Crypto

There’s a big problem with crypto trading. Too many fraudulent actors. People actually take trade signals from random people in twitter— with no way to vet anything.

CoinSavage is the platform to change all of that. They have built a fantastic (and free) platform where all portfolios, trades, and ideas are open sourced and timestamped. No more hindsight TA, now you can actually see for yourself if people are performing, and prove to your audience you know what you’re talking about.

Around the corner:

What I’m reading today:

Ethereum holdings in the ICO treasury accounts

BitMEX research at it again with an exploration of Ethereum ICO holdings. Their abstract summarizes the findings nicely. Highly suggest reading the post, as there are some gems of information. Their thought process of collecting and analyzing the data is quite interesting as well.

Abstract: Following on from our first piece on ICOs in September 2017, which focused on the team members and advisors, in this report we work with TokenAnalyst to track the Ethereum balances of the ICO projects over time. We look at the amount of Ethereum raised and the US$ value of the gains and losses caused by changes in the Ethereum price, for each project. We conclude that rather than suffering because of the recent fall in the value of Ethereum, at the macro level, the projects appear to have already sold almost as much Ethereum as they raised (in US$ terms). Of the Ethereum still held by the projects, even at the current c$230 price, projects are still sitting on unrealised gains, rather than losses.

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