The week’s developments in the crypto currency world including Coinbase Custody acquires Xapo’s institutional business, becoming the world’s largest crypto custodian

Coinbase Custody acquires Xapo’s institutional business, becoming the world’s largest crypto custodian

Coinbase Custody has completed an acquisition of Xapo’s institutional businesses. Coinbase Custody has grown to over $7 billion in Assets Under Custody (AUC) stored on behalf of more than 120 clients in 14 different countries. Xapo has long been a pioneer in the storage of crypto assets, leading the industry in the creation of security techniques that have kept their customers’ cryptocurrency safe since 2014. Xapo was founded with the mission of making Bitcoin more secure and accessible. Coinbase will extend Xapo’s legacy and bring it yet another step closer to achieving its mission. Through the acquisition of Xapo’s institutional businesses, Coinbase now be a gateway for millions of people to cryptocurrency and one of the world’s largest custodian of digital assets.

(Source: “Coinbase Custody acquires Xapo’s institutional business, becoming the world’s largest crypto custodian”, available at https://blog.coinbase.com/coinbase-custody-acquires-xapos-institutional-business-becoming-the-world-s-largest-crypto-2c1b46fc94c4

UK advertising watchdog upholds complaint against BitMEX bitcoin ad

The Advertising Standards Authority (ASA) has upheld its complaint against a Bitcoin advertisement from top crypto derivatives exchange BitMEX. According to an ASA announcement dated Aug. 14, the ASA has taken issue with the purportedly misleading nature of a graph showing Bitcoin (BTC) price performance in a newspaper ad from January of this year.

As the ASA outlines, the ad in question comprised a double spread of a logarithmic graph showing the value of Bitcoin against the U.S. dollar over the past decade. Alongside the graph, BitMEX’s ad included two texts: first, on the left page, it stated: “3 January 2009. Ten years ago today, the first block of the Bitcoin blockchain referenced the front page of The Times.” On the right was written: “3 January 2019. Turns out, that was a pretty big deal.”

The ASA says it received four complaints, all of which accused the ad of being misleading on the basis of either exaggerating the return on an investment in Bitcoin or of failing to illustrate the risks of an investment in the asset.
The ASA has nonetheless judged that the scale used in the graph was liable to be misinterpreted by a wide audience lacking in specialist knowledge. It also deemed Hayes’ references to Bitcoin being “still very much an experiment” and other statements insufficient to illustrate the investment risks entailed.

Source: “UK advertising watchdog upholds complaint against BitMEX bitcoin ad”, available at https://cointelegraph.com/news/uk-advertising-watchdog-upholds-complaint-against-bitmex-bitcoin-ad

Crypto trading app Robinhood launching in UK following FCA approval

Robinhood International, a Robinhood subsidiary, has received FCA regulatory approval according to a blog post on Aug. 7. The FCA approval will allow the firm to bring its investing platform to British customers, Robinhood said in the report, adding that the move would be a critical step on its path to democratizing finance for all. According to the post, the Robinhood team in London is already growing, and the company is hiring in fields of operations, compliance, user research and marketing. Robinhood offers commission-free cryptocurrency trading. In February 2018, Robinhood mobile trading app launched zero-fee trading of Bitcoin and Ether for the first batch of users in the U.S. Earlier this year, Robinhood received a BitLicense to offer crypto-related services in New York from the New York State Department of Financial Services.

Source: “Crypto Trading App Robinhood Launching in UK Following FCA Approval”, available at https://cointelegraph.com/news/crypto-trading-app-robinhood-launching-in-uk-following-fca-approval

ECB says it’s ramping up crypto surveillance to include off-chain data

The European Central Bank (ECB) says the “central banking community” will refine its monitoring of cryptocurrency transactions, both on- and off-chain. In an Aug. 7 report entitled “Understanding the crypto-asset phenomenon, its risks and measurement issues,” the ECB argues that “closing the data gaps associated with crypto-assets” continues to pose a significant challenge for regulators and financial institutions. The report argues that the risks and spillover effects of crypto assets to the real economy, depends on the extent that the two spheres are interconnected. It advises that the ECB should, therefore, prolong and refine its qualitative and quantitative analysis of the new asset class. The ECB pledged to continue to analyze both on-chain and layered protocol transactions and to focus on harmonizing and enriching metadata for off-chain transactions, as well as developing best practices for crypto asset indicators.

Source: “ECB says it’s ramping up crypto surveillance to include off-chain data”, available at https:// https://cointelegraph.com/news/ecb-says-its-ramping-up-crypto-surveillance-to-include-off-chain-data

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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