CryptoAM: Bitcoins a Commodity, Poloniex Cuts Margins, and Gemini Buys Insurance

Thursday, October 4th

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3 things you need to know:

One: Poloniex to de-list three assets and remove margin and lending products for US clients.

Image result for poloniex logo

Farewell to the first margin trading platform I ever used. Poloniex is shutting down it’s margin trading platform for U.S investors.

It’s bittersweet, as Poloniex is where I cut my teeth on crypto. It’s also the place where I lost a ton of money figuring out how to trade.

Like I said, bittersweet.

Poloniex is making these moves to ensure regulatory compliance going forward, as the crypto/blockchain regulatory landscape continues to evolve and additional guidelines are set. Margin trading and lending services are still available on other, competing exchange platforms, but not in the United States.

“By the end of the year, we're taking steps to remove our margin and lending products for US-based customers. These changes are part of our ongoing commitment to ensure that Poloniex complies with regulatory requirements in every jurisdiction. We are also announcing that on October 10th at 12:00pm ET we will be delisting three assets: AMP, EXP, GNO.

Two: Gemini secures insurance coverage for assets held under its custodial arm.

Image result for Gemini logo winklevoss

The lending services firm Aon will be providing insurance to Gemini. Last year, it claimed a 50% market share in the crypto insurance industry last year. Insurance coverage will greatly appeal to the institutional crowd, who require some degree of protection similar to those present in traditional markets

Yusuf Hussain, the Head of Risk for Gemini, had this to say:

“Consumers are looking for the same levels of insured protection they’re used to being afforded by traditional financial institutions. Educating our insurers not only allows us to provide such protections to our customers, but it also sets the expectation for consumer protection across the crypto industry.”

Gemini has been making big moves lately:

  • It launched the compliant and audited Gemini Dollar USD pegged stable coin

  • Gemini poached the former Chief Information Officer from the NYSE. He will be in charge of tech, market surveillance, and more.

  • Gemini revealed in April that it will begin to offer block trading services outside of their traditional order books.

Three: A federal court declares that virtual currencies are commodities.

A ruling on Wednesday declared virtual assets to be commodities, bringing virtual currencies under the CFTC’s jurisdiction.

“This is an important ruling that confirms the authority of the CFTC to investigate and combat fraud in the virtual currency markets.  This ruling…recognizes the broad definition of commodity under the CEA, and, also, that the CFTC has the power to prosecute fraud with respect to commodities including virtual currencies.  We will continue to police these markets in close coordination with our sister agencies.”

The big picture: Giving the CFTC a clear jurisdiction should help bring more clarity and organization to the digital currency regulatory landscape. It also confirmed suspicions that Bitcoin is a commodity, and give the agency power to combat the rampant fraud and manipulation that exists in the cryptocurrency markets.

  • As the CFTC focuses significant efforts on fighting fraud, the likelihood of a Bitcoin ETF rises. The main reason for rejection of an ETF was the extensive manipulation of the markets. If the CTFC efforts prove effective, they could be the catalyst for confirmation and release of future Bitcoin products.

Also in the news:

Market Outlook:

Quick Take

Direction: We have a short-lived upwards spike, and are now trading back within the 6300-6600 range. I’m still expecting further downside here, although there has been a holding up of alt coin ratios, which is usually a bullish sign. Will be looking to large cap alt volumes to find indication for a rally.

Key Support:  6500, 6440, 6300

Key Resistance: 6530, 6620, 6700

Actions: I’m still net short BTC, but picking up some alt coins that have bleed in value vs BTC over the past week and are bottoming out. Things like IOTA, HOT, and NANO are on my short list. Will flip to a long position on a break of 6700 with volume.

Fear & Greed

Same story as before. F&G is climbing slowly down. If we can make it fearful through a slowing of volume and a low slope decline, that bodes well for future price action. As of right now F&G is neutral, and when combined with the Bearish structure of the markets we expect further price declines.

Here’s a reminder of what these criteria mean

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Around the corner:

What I’m thinking today:

Some interesting take-aways from the the FinTech CFTC conference:

  • The CFTC is incredibly concerned with the manipulation of spot Bitcoin markets, and are dedicated significant resources to detecting spoofing (the main concern).

  • Institutions are not entering the space mostly due to regulatory uncertainty and custody issues, and the lack of price discovery in the markets

  • The U.S wants to introduce sensible regulation, but is focusing most of it’s efforts on collecting information and learning right now.

  • Enforcement actions will be targeted at overtly fraudulent institutions, and organizations that are transparent and forthcoming with their operations will likely be treated more leniently.

  • Goodwill and good faith attempts to stay within the law will go a long way in protecting your company from regulatory action.

  • Chris Giancarlo, Chairman of the CFTC and the “crypto dad”, does not like being called “crypto daddy”.

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CryptoAM is a Ledger Group project. We offer consultancy, advisory and research services for established companies and start-ups interested in the blockchain & digital asset space.