Goldman Sachs Announces Official Launch of a Cryptocurrency Trading Team

Goldman Sachs Announces Official Launch of a Cryptocurrency Trading Team

Goldman Sachs has announced via its internal memo seen on CNBC Friday that it has assembled a cryptocurrency trading team. According to the publication, this would be the first time the behemoth investment bank has confirmed a relation with cryptocurrency trading.

The memo, titled “Formation of Cryptocurrency Trading Team,” was composed by Rajesh Venkataramani, a partner at Goldman Sachs.

Venkataramani noted that he was “pleased to announce the formation of the firm’s cryptocurrency trading team, which will be our centralized desk for managing cryptocurrency risk for our clients.” The executive wrote that “the crypto trading team will be a part of Global Currencies and Emerging Markets (GCEM), reporting to me, within the firm’s Digital Assets effort led by Mathew McDermott.”

The Goldman partner explained that “as part of our initial launch, we have successfully executed bitcoin (BTC) NDFs [non-deliverable forwards] and CME BTC future trades on a principal basis, all-cash settling,” stating that:

“Looking ahead, as we continue to broaden our market presence albeit, in a measured way, we are selectively onboarding new liquidity providers to help us in expanding our offering.”

“In addition, yesterday we launched our Digital Assets dashboard which provides daily and intraday cryptocurrency market data and news to our clients.” We invite you to highlight the dashboard to your clients.”

However, Venkataramani clarified that “the firm is not in a position to trade Bitcoin or any cryptocurrency (including Ethereum) on a physical basis.”

Many Banks are Scrambling to Offer Crypto Services
The Bitcoin futures and non-deliverable forwards (NDFs) traded by Goldman Sachs are settled in cash. Reports show that the New-York-based investment bank hedges against Bitcoin’s volatility by trading on CME Group and working with Cumberland DRW as its trading partner.

Meanwhile, apart from Goldman Sachs, Morgan Stanley also started offering Bitcoin exposure about a month ago. However, the company announced that this investment vehicle was reserved for only its wealthy clients. Also, Citigroup is rumored to be working on a crypto service plan as more banks begin offering crypto services and exposure.

 

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Vietnam Government Launches Inquiry into Crypto Industry for Regulation Purposes

Vietnam Government Launches Inquiry into Crypto Industry for Regulation Purposes

Vietnam has begun to show interest in the cryptocurrency industry, as the government recently announced the commissioning of a research group for the very purpose. According to the announcement, the inquisition into the crypto space comes as the cryptocurrency industry continues to gain global recognition and adoption.

The Vietnamese Ministry of Finance also announced that it is carrying out an in-depth study on cryptocurrencies for regulation purposes.

The government argues that about one million Vietnamese use digital assets and that this number will likely grow by 30 folds by 2030.

Vietnam is also witnessing a spike in cashless solutions for payments, like QR codes, e-wallets, and mobile apps. This boom in technology adoption got triggered by the Prime Minister’s push to reduce cash transactions by 90% in 2020.

The research will get centered on the existing legal frameworks in the US, Japan, and Europe:

“To understand the cryptocurrency industry; To recognize the existence of cryptocurrencies by amending the current law; To build transparent, predictable, and efficient regulations; To build responsive legislation concerning the high variability of the market; (…) To recommend structural adjustments by creating mechanisms to monitor the cryptocurrency market through skilled supervisory bodies; (…) To recommend tools to these supervisory bodies, namely powers to issue, suspend or revoke licenses, to regulate business practices, and to report suspicious activities.”

Vietnam Government is Concerned About Crypto-Related Scams
Vietnam’s desire to regulate the cryptocurrency space comes amid government concerns over crypto-related crimes, including hacks and scams.

The recent announcement cited the case of Modern Tech, a domestic tech startup, which swindled thousands of Vietnamese through shady initial coin offerings (ICOs) to the tune of $660 million. The report noted that:

“Therefore, implementing a legal device to manage and handle virtual assets is the current challenge of Vietnam. It would also set boundaries to abusive cryptocurrency transactions, which is the government’s main concern.”

Presently, the Vietnamese government does not recognize cryptocurrencies as a legal payments solution or a tangible asset. Recently, the State Bank of Vietnam branded Bitcoin (BTC) and other cryptocurrencies as illegal and warned that individuals caught trading them could face fines as high as $8,700 and jail time.

 

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Hundreds of Banks in the US to Offer Crypto Services to Customers

Hundreds of Banks in the US to Offer Crypto Services to Customers

A recent report by CNBC shows that hundreds of banks in the US will start offering Bitcoin (BTC) exposure to their customers this year, courtesy of a strategic partnership between Fidelity National Information Services (FIS) and the New York Digital Investment Group (NYDIG). Several banks have enrolled to get listed in the program in anticipation of capital movement from bank accounts to cryptocurrency exchanges.

That said, customers of these banks will be able to buy, hold and sell Bitcoin through their bank accounts.

FIS is a vendor to banks with a cumulative customer base of about 300 million checking accounts. Although hundreds of banks have enrolled in the program, Patrick Sells—head of bank solutions at NYDIG—noted that the firm is in talks with some of America’s biggest banks about offering Bitcoin service. The executive noted that:

“What we’re doing is making it simple for everyday Americans and corporations to be able to buy bitcoin through their existing bank relationships. If I’m using my mobile application to do all of my banking, now I have the ability to buy, sell and hold bitcoin.”

Bigger Banks to Join Soon
The president of NYDIG, Yan Zhao, argued that banks used to avoid dealing with Bitcoin but are now showing interest in the investment vehicle, as customers are moving their funds out of their bank accounts into crypto exchanges. Zhao noted that:

“This is not just the banks thinking that their clients want bitcoin, they are saying ‘We need to do this because we see the data.’ They’re seeing deposits going to the Coinbases and Galaxies and Krakens of the world.”

Meanwhile, Rob Lee—head of digital banking at FIS—noted that he expects big banks like JP Morgan Chase & Co. and Bank of America to become pressured to offer crypto investments to their customers given the recent development with banks in the US.

 

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New Thai Cryptocurrency Law to Mandate Physical Presence for Account Opening

New Thai Cryptocurrency Law to Mandate Physical Presence for Account Opening

The government of Thailand has imposed a new cryptocurrency law, which would require new users to be physically present for registration on exchanges. The Thai Anti-Money Laundering Office (AMLO) noted that the new law will take effect starting from July and that verification of identities will be done using dip-chip machines.

Presently, crypto account opening on exchanges is done entirely online. All new users have to do is comply with the regulations set by the Thai Securities and Exchange Commission (SEC) for know-your-customer (KYC) requirements and suitability tests.

Subsequently, the KYC documents must be authorized by relevant government agencies, and fake documents will get promptly rejected.

Poramin Insom, co-founder and director of crypto trading platform Satang Corp., explained that:

“Digital asset exchanges have a duty to report any transaction worth over 1.8 million baht [$58,000] under the money laundering law, and must set up a database for inspections by regulators.”

The Anti-Money Laundering Act came into law in 1999 and mandates financial businesses and legal professionals, like investment advisers and real estate brokerages, to file all transactions that meet the requirement of the law. The entities are also required to keep documentation and transaction data from as far as 5-10 years as evidence.

Thai Gold Shops Already Use Dip-Chip Verification for Customers
Meanwhile, more than 6,000 gold shops across Thailand will require customers to present their ID cards when purchasing or selling gold worth over 100,000 baht ($3,200) in cash.

Thanarat Pasawongse, the chief executive of Hua Seng Heng, asserted that most large gold shops have been using dip-chip machines to verify the identity of customers for over four years because of the convenience it allows.

That said, customers are required to present a valid ID for cash transactions over 100,000 baht ($3,200). Also, a report should get filed with AMLO for transactions over 2 million baht ($64,000), and businesses must report suspicious transactions to the authority.

 

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An Introductory Guide to Stock Tokens

An Introductory Guide to Stock Tokens

Stock tokens, typically held by Binance, are digital assets that closely track the price action of traditional financial securities, like stocks of publicly traded companies. These tokens are delta-one products backed by physical shares, which means that price movements in the underlying assets are replicated to the tee by the derivative.

Unlike traditional stocks, interested customers can purchase fractions of their desired company stock via stock tokens. For example, Tesla shares(NASDAQ: TSLA) are traded at over $700 per share, however, stock tokens allow users to purchase a piece of the TSLA (say 0.01 shares) instead of purchasing the entire unit.

Additionally, Binance does not charge a commission for stock token transactions, allowing traders to save money. Meanwhile, token holders also receive dividends and other financial perks of holding the real asset. However, token holders do have voting rights.

Stock Tokens Explained
Stock tokens are denominated (e.g MSFT/BUSD), settled, and collateralized in BUSD, which makes profit calculations easier. Meanwhile, stock tokens are cash-settled, which means that physical redemption of the underlying asset is impossible.

These tokens are with collateral retained by a third party, giving every share representative value of the publicly listed company. With this, the price of the token gets pegged to the price of the underlying shares.

Every token is backed and coded by shares held by CM-Equity AG in Germany. CM-Equity AG conferred the acquired crypto assets to a third-party brokerage for safe-keeping. Additionally, CM-Equity AG will monitor all trading activity for compliance purposes.

Requirements to Trade Stock Tokens
Only Binance users with level KYC verification, which includes ID and face verification, can trade stock tokens. In Germany, a minimum of level 3 KYC verification is encouraged.

That said, stock tokens are optimal for Binance users looking to diversify their portfolio beyond cryptocurrency and into other investment markets like the traditional financial markets. Users that cannot access stockbrokers usually find this process to be difficult but can trade stock tokens to gain knowledge and exposure to the traditional financial markets. This investment option is very conducive and flexible and could improve market access to users who cannot afford the full purchase price of shares.

 

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An Introductory Guide to Non-Fungible Tokens (NFTs)

An Introductory Guide to Non-Fungible Tokens (NFTs)

The cryptocurrency and blockchain industry continues to evolve as new crypto-based entrants, including utility tokens, security tokens, and privacy tokens, move the industry to higher levels of engagement and adoption. That said, Non-Fungible Tokens (NFTs) have gained massive attention over the recent months. In this short guide, we will look at what NFTs are and how exactly they work.

Non-fungible tokens (NFTs) are another example of the fast-paced change in the industry. In this guide, we explore what NFTs are, how they work, and how they’re being used.

What are Non-Fungible Tokens?
NFTs are digital assets containing personalized information recorded in smart contracts. This personalized-based nature gives these tokens their uniqueness, as they are irreplaceable and cannot get swapped. Simply put, there can be no two similar NFTs.

Unlike fiat and transferable digital assets, non-fungible assets are not divisible, much like how concert tickets cannot get shared.

One of the very first NFTs was CryptoKitties collectibles. Every blockchain-based digital kitten is unique; if you send someone a CryptoKitty and receive a CryptoKitty from someone else, the one you receive will be a completely different CryptoKitty from the one you sent. Collecting several unique digital kittens is the goal of the game.

The unique information on a non-fungible token is embedded in its smart contract and is permanently recorded on the underlying token’s blockchain. CryptoKitty launched as ERC-721 tokens on the Ethereum blockchain but have migrated to their blockchain, Flow, to provide easier access for new customers.

How are Non-Fungible Tokens Used?
NFTs are used as digital assets that need to be differentiated from other tokens to prove their scarcity or value. They can represent anything and everything from artwork to texts to ownership licenses.

Non-fungible tokens are not traded on typical cryptocurrency exchanges but are bought or sold on NFT markets like Rarible, OpenSea, and Enjin Marketplace.

How Do NFTs Work?
Regular tokens like Bitcoin and Ethereum-based ERC-20 tokens are fungible, which means they can get exchanged, in whole or in part, for another with equal value. However, Ethereum’s non-fungible token standard is ERC-721.

NFTs can also be created on other smart-contract-enabled blockchains that have non-fungible token support. Blockchains like NEO, EOS, and Tron all offer NFT standard platforms.

Non-fungible tokens and their smart contracts create a medium for detailed attributes, like the owner’s identity, rich metadata, and secure file links, to be added to digital assets. That said, the ability for NFTs to provide immutable ownership to an asset is a big step in the ever-growing digital world. These tokens could see blockchain’s promise of trustless security applied to the ownership or exchange of virtually any asset.

 

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German Regulator Warns Binance of Securities Law Violation Risk with Stock Tokens

German Regulator Warns Binance of Securities Law Violation Risk with Stock Tokens

Some weeks ago, Binance released its commission-free tradable stock tokens to help link the cryptocurrency industry and Wall Street. However, a top German financial regulator, BaFin, has warned that Binance could face heavy fines and scrutiny for offering security tokens without publishing the investor prospectus.

Upon launch, the behemoth exchange announced that it would allow users to trade tokenized Tesla and Coinbase Global stocks against its native stablecoin BUSD. Binance announced again on Monday that it would offer users the ability to trade additional tokenized stocks, including Apple, Microsoft, and MicroStrategy.

The German regulator noted yesterday that there was no prospectus on Binance’s website for Tesla, Coinbase, and MicroStrategy. BaFin specified that the move by Binance went against the European Union securities law and that it could attract a fine of 5 million euros or 3% of the company’s previous year’s turnover.

According to a report by Reuters, BaFin noted that:

“BaFin has grounds to suspect that Binance Germany is selling shares in Germany in the form of ‘share tokens’ without offering the necessary prospectuses. Please bear in mind that securities investments should only ever be carried out based on the necessary information”.

Binance Assures Compliance with Regulatory Requirements
With the latest regulatory issue, Binance has asserted that it intends to comply with any regulatory requirements it faces. In an email to Bloomberg, Binance spokesperson Jessica Jung noted that:

“Binance takes its compliance obligations very seriously and is committed to following local regulator requirements wherever we operate. We will work with regulators to address any questions they may have.”

The company assured that its stock tokens would help investors globally tap into the economic benefits of the stock performance and dividends.

 

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South Korean Cryptocurrency Enthusiasts Call for Removal of FSC Chairman Over Anti-Crypto Comments

South Korean Cryptocurrency Enthusiasts Call for Removal of FSC Chairman Over Anti-Crypto Comments

As the government of South Korea continues to hold an unfriendly stance towards cryptocurrency, domestic traders have erupted in anger over the recent statements from the Chairman of the Financial Services Commission (FSC), Eun Sung-soo, and are calling for his resignation.

The Korean presidential website has gotten flooded with thousands of petitions from irate, mainly young traders, to terminate the appointment of Eun, following his statements about cryptocurrencies having no “intrinsic” value whatsoever.

However, such views are not new among South Korean government officials and banking institutions. Notably, that is the same rhetoric put forward by Seoul’s government and the Bank of Korea regarding cryptocurrency.

The FSC chairman has been very vocal with his warnings on the newly-passed cryptocurrency regulations.

Chairman of the Financial Services Commission (FSC) Eun Sung-soo.

Per the new regulation, crypto exchanges caught on the wrong side by September risk getting shut down by the government.

One of the petitions filed on the government’s website, asking for the dismissal of the FSC chairman, has 141,659 signatures. Another has about 8,567 signatures.

Petition to Recognize Cryptocurrency as Legitimate
There is another petition on the government’s website asking the government to recognize the cryptocurrency industry as a legitimate one ahead of its plans to begin taxing the industry by 2022.

With the backdrop of petitions flooding in, a member of the Democratic Party in South Korea told Yonhap, a South Korean-based news agency, that they are looking into the issue and are trying to evaluate it “with young people who invest a lot in cryptocurrencies.”

The official also noted that:

“Basically, it is right to leave the cryptocurrency issue to the market. The government’s high-intensity countermeasures are necessary for the spread of illegal activities and fraud damage caused by overheating of investment.”

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All Cryptocurrency Exchanges in South Korea Could Get Shuttered Under New Act

All Cryptocurrency Exchanges in South Korea Could Get Shuttered Under New Act

According to a report by the Korea Times, the Chairman of South Korea’s Financial Services Commission (FSC), Eun Sung-soo, has warned that all 200 cryptocurrency exchanges in the country could get shut down in September once a specific financial law gets implemented.

He noted that cryptocurrency exchanges need to register with the Financial Services Commission under the revised Special Funds Act. Sung-soo explained that the Commission was “now accepting applications for them to register their business by the timeline, but no exchange operators have applied to date.” He warned defaulting exchanges that “they could be shut down suddenly in September.”

The revised Act got effected on March 25 and will get enforced on September 24, giving cryptocurrency exchanges a six-month grace period. The revised Special Funds Acts mandates cryptocurrency providers, like crypto exchanges, to comply with some requirements such as Information Security Management System (ISMS) certification and issuance of real-name accounts.

FSC Chairman Eun Sung-soo.

The FSC is in charge of registration for cryptocurrency exchanges that meet the conditions mentioned above. However, many cryptocurrency exchanges are worried that they might default on the requirement, especially on the real-name account bit.

Korea to Begin Taxing Cryptocurrency Transactions
Meanwhile, Sung-soo argued that cryptocurrencies are not currencies, highlighting that the Korean government has cautioned against investing in them, noting that their “sudden price fluctuations are dangerous.”

Additionally, the FSC chairman revealed that profits from cryptocurrency investment would get taxed from 2022. The Ministry of Strategy and Finance announced earlier this year that income gains from cryptocurrency transactions will get classified as other traditional income and will accrue a tax rate of 20%.

 

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South Korea Tax Authority Begins Confiscation of Crypto Asset Owned by Tax Defaulters

South Korea Tax Authority Begins Confiscation of Crypto Asset Owned by Tax Defaulters

According to a report by Yonhap last week, the Seoul metropolitan government has confiscated crypto assets from hundreds of tax-defaulting cryptocurrency investors in South Korea.

Based on the report, the government’s tax collection department has identified cryptocurrencies on three cryptocurrency exchanges belonging to 1,566 individuals, including company heads. So far, coins belonging to about 676 investors have gotten confiscated, with the government claiming that these people owe 28.4 billion won ($25.4 million) in overdue taxes. The authority added that it would go after the assets of the 890 investors next.

Several of the affected investors have scrambled to pay back 1.2 billion won since the seizure, with the city government confirming that:

“We are continually being asked by delinquent taxpayers to refrain from selling their cryptocurrencies as they will pay their taxes.”

The authority added that:

“We believe the taxpayers expect the value of their cryptocurrencies to increase further due to the recent spike in the price of cryptocurrencies and have determined they will gain more from paying their delinquent taxes and having the seizure released.”

The government provided a repayment example, citing a hospital head who pleaded with the authorities not to sell his crypto assets and immediately paid 580 million won out of the 1 billion won he owed in unpaid taxes and provided collateral for the rest.

Another defaulting taxpayer asked the government not to sell his confiscated crypto assets worth 3 million won, noting that the value of his holding could grow significantly in the next two years and would be more than enough to cover his tax debt.

19% of Seized Crypto Assets Is Bitcoin
Meanwhile, the tax authority noted that the most popular cryptocurrency held by defaulters was Bitcoin, which accounted for 19% of all seized assets. Dragonvein and XRP came second with 16% each, while Ethereum and Stellar accounted for 10% and 9%, respectively.

 

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