The week’s developments in the crypto currencies world including stablecoin adoption can impact economy, warn senior US regulators

Stablecoin Adoption Can Impact Economy, Warn Senior US Regulators

A panel of senior financial regulators in the United States has warned the public about the purported risks of stablecoins and cryptocurrencies.
A report issued on Dec. 4 by the Financial Stability Oversight Council (FSOC) highlighted potential problems resulting from stablecoins gaining wider recognition.
The FSOC was set up in 2008 to combat risks to the financial sector after the financial crisis. The panel is headed by United States Secretary of the Treasury Steven Mnuchin. Its voting members include Jay Clayton, the chairman of the Securities and Exchange Commission (SEC), as well as Heath Tarbert, who recently took over as chairman of the Commodity Futures Trading Commission (CFTC).
In its annual report for 2019, the regulators stated, “If a stablecoin became widely adopted as a means of payment or store of value, disruptions to the stablecoin system could affect the wider economy. Financial regulators should review existing and planned digital asset arrangements and their risks, as appropriate.”
The FSOC additionally mentioned Bitcoin (BTC) and other cryptocurrencies as part of its coverage. It appeared unable to draw concrete conclusions about the phenomenon, acknowledging that trading data was “sparse and may be unreliable.”
The panel also expressed doubts over so-called distributed ledger technology (DLT) — a byword for digital currency projects notionally related to blockchain.

Source: https://cointelegraph.com/news/ripple-to-invest-up-to-50m-in-moneygram-following-new-partnership

Ex-Morgan Stanley Executives Launch Crypto Derivatives Platform in Singapore

A team of Morgan Stanley veterans has launched a crypto derivatives trading platform, claiming it is faster and more secure than some of the market’s biggest players.

Jack Tao, who served as a senior leader at Morgan Stanley’s electronic trading desk, said he launched Phemex last month with a team of more than 30 developers, including eight executives from the investment banking giant.

Tao left his job at Morgan Stanley in New York and co-founded the crypto trading firm in Singapore in July, envisioning a platform that would be as fast and secure as stock and futures exchanges.

“Phemex is ten times faster than traditional crypto trading platforms with the ability to manage 300,000 TPS – the fastest matching engine online,” said Tao, who specialized in high-frequency trading. No existing platform has achieved such transaction speeds, he said.

Phemex’s architecture can reduce latency so as to deliver an order entry and response time of less than one millisecond while maintaining stable APIs for algorithmic trading, according to Tao.

While crypto trading is fiercely competitive, Tao believes Phemex has a comparative advantage as a small platform.

Source: https://www.coindesk.com/ex-morgan-stanley-executives-launch-crypto-derivatives-platform-in-singapore

Microsoft Teams up With Enjin to Offer Crypto Collectible Rewards

Do good work, earn a “badger.” That’s the idea behind a new incentives scheme launched by Microsoft in partnership with blockchain gaming project Enjin. Dubbed Azure Heroes, a new web page for the initiative describes its as a “new and fun way to earn digital collectibles for meaningful impact in the technical community.”
Simply, Azure Heroes rewards Azure community members for positive actions, such as coaching, making demos, providing sample code, making posts about Azure or completing challenges.

Participants with demonstrable contributions will be handed badges, er no, badgers, across various categories. These include community leadership, content, mentorship and innovators.
Issuance and transactions of the badger collectibles will be carried out on the ethereum blockchain, allowing winners to hold them as non-fungible tokens (NFTs).

Source: https://www.coindesk.com/microsoft-teams-up-with-enjin-to-offer-crypto-collectible-rewards

Crypto Exchange UpBit’s Operator Launches Custody Service with Ledger

DXM, a financial services subsidiary of South Korean fintech firm Dunamu, has worked with crypto cybersecurity firm Ledger to launch an institutional crypto asset custody service.

Industry news outlet TheBlock reported on Dec. 4 that DXM plans to launch the custodian under the name Upbit Safe and that Ledger Vault, Ledger’s custody arm, will support the initiative with its technology. Upbit safe will reportedly use Ledger’s hardware security technology to make trading more efficient and safer for its institutional clients.

Ledger’s Head of Asia-Pacific region Glenn Woo explained that Ledger Vault offers solutions that allow institutions to customize their custody rules to better fit their needs. DXM Chief Strategy Officer Eric Yoo told the outlet that the firm plans to target UpBit’s customers first.

Yoo admitted that institutional participation in the crypto space in South Korea is largely hampered by unclear regulation. Still, he believes that clarity should improve as soon as next year, bringing new money to the local crypto industry.

Source: https://cointelegraph.com/news/crypto-exchange-upbits-operator-launches-custody-service-with-ledger

France Announces Digital Currency Venture

According to a report from the AFP News Agency, France’s central bank will be launching a digital asset (decisively different than a crypto asset) in the coming year.

The outlet reported via Twitter, the Bank of France’s governor, Francois Villeroy de Galhau, said in a recent statement that his organization will start running “experiments” rapidly on digital assets and will “launch a call for projects” before the end of the first quarter of 2020 — literally just three or four months away. Galhau made this comment at ACPR, a French regulatory agency for banks and insurance based in Paris.

He further asserted that this venture, if launched, will not promote widespread anonymity in large transactions, “Thresholds on the amounts of anonymous transactions, as is already done in France for payments in electronic money or cash, could be introduced for this purpose.”

If France launches its digital asset before Q1 of 2020, it could be the first leading first-world country to have such a venture, as it would come before China’s digital renminbi.

Source: https://www.newsbtc.com/2019/12/04/france-announces-digital-currency-venture-crypto-bulls-roar/

Claire Cummings

Claire practises financial services law with a focus on regulatory issues, cryptocurrencies and tokens, trading and brokerage documentation and advising both existing and start-up funds and fund managers.

If you would like to discuss any of the points we raise, please contact me or one of our other lawyers.

Phone: 0207 585 1406
Email: claire.cummings@cummingsfisher.com

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