Institutional Digital Asset Newsletter - February 2020

Newsletters • Feb 23, 2020

Once a month, we summarize the best crypto news for Institutional Investors

In this monthly newsletter, we plan to answer questions institutional investors may have about Digital Assets. We won’t offer investment advice, but we hope to make it easier for you to develop your own strategy, and to keep abreast of the fast-paced evolution of an emerging asset class.

In each newsletter you’ll get a smattering of links from Trakx and from other reputable sources that reveal trends and developments for our sector. We’ll also fill you in on movements of people and companies (we might even mention you!).

We hope that you find this useful. Constructive criticism is welcome, feedback is valued, and praise will just make our day. Please send comments to [email protected]

INVESTING

Stablecoin: a way to foster adoption of digital assets?

Volatility in crypto prices have been regarded as a big hurdle for mainstream adoption. Stablecoins could be a way of eliminating such erratic fluctuations. Stablecoins are a new type of cryptocurrency that often have their value pegged to another asset.These coins can be pegged to fiat currencies such as the United States dollar, other cryptocurrencies, precious metals or a combination of the three. Fiat seems to be the most popular option in the marketplace right now, meaning one unit of a stablecoin equals $1.

Stablecoins are designed to tackle the inherent volatility seen in cryptocurrency prices. They are normally collateralized, meaning that the total number of stablecoins in circulation is backed by assets held in reserve. Put simply, if there are 500,000 USD-pegged coins in circulation, there should be at least $500,000 sitting in a bank.

USD-backed stable coins are the most active & popular with the lowest failure rate, while 67% of the closed stable coins were backed by Gold.

Digital Assets Order splitting, what is it?

Dividing transactions into parts and using different crypto exchanges is a common way to trade big volumes.

If someone sells a huge amount of crypto at one moment, it could possibly cause the markets to panic, forcing prices to change. Therefore, dividing a large transaction into many parts and selling it over a long period of time is a common trick for those who want to trade large amounts. Still, you might get less money for later transactions, as the value is pushed down by selling more than the market demand can handle. If you are planning to trade Big Crypto Volumes, this article could be helpful.

NEW ASSET OVERVIEW

Binance BNB token

Binance is a crypto exchange that started in the summer of 2017 and quickly became one of the largest in the world by trading volume, recording $200 million in profit in its second full quarter of operation. Binance Coin, BNB, was launched as an ERC-20 token sold through an initial coin offering (ICO) to be used for discounted trading fees, of which a portion are burned each quarter.

Once Binance launched Binance Chain, its own public blockchain in April 2019, the ERC-20 tokens were swapped for native tokens. On top of Binance Chain, the team built a decentralized exchange known as Binance DEX allowing traders to maintain custody of their funds. Over time, additional utility has been added to the token such as use in the Binance Launchpad lottery system and various payments in the Binance ecosystem. Finally, according to their CEO Changpeng Zhao ("CZ") 90% of Binance employees choose to receive part of their salary in BNB.

PLATFORM

REGULATION

The European Securities and Markets Authority has claimed in their 2020-22 focus announcement dated 9 Jan 2020, that the regulator will try to integrate cryptocurrency regulation in the European markets on a much more concentrated level.

Although the announcement didn’t give too much information on what the authority will be focusing on when implementing a joint regulation, several experts have already concluded that there will not be any bans or restrictions coming to the industry.