Kiffmeister’s Fintech Daily Digest (04/30/2020)

Telegram Caves to US Regulators: Delays Blockchain Launch, Offers to Return $1.2B to Investors
With Telegram missing its deadline to launch TON by April 30, a refund clause in Telegram’s purchase agreements means that investors can now claim refunds. However, while proposing an immediate refund of 72% of investors’ stakes, the platform is also offering repayment of 110% on April 30, 2021.

CBDCs – from interest to action
An R3 white paper explores proposed CBDC models and applications from across the globe, and examines technologies for different implementations based on recent engagements with central banks and payment infrastructure providers. It discusses use cases that CBDCs are solving, the benefits they may unlock, minimum viable ecosystems, the difference between the hybrid, synthetic and direct models, and the technologies, including blockchain, that are being considered.

Mobile money recommendations to central banks in response to COVID-19
A Groupe Spécial Mobile Association (GSMA) note examined the impacts of COVID-19 on mobile money business and provided broad recommendations that could be taken to ensure business continuity and sustainability. It also has a tabulation of the measures taken by governments and mobile money providers to limit the spread of the virus by encouraging digital payments and ease the cost of living burden on citizens who use digital payments.

How payments can adjust to the coronavirus pandemic—and help the world adapt
OVID-19 will have a long-lasting impact on all industries, and the payments sector will be no exception, according to a McKinsey report. It highlights ten fundamental changes to be prepared to emerge from the current crisis efficiently and define the post-COVID-19 future.

Why Bitcoin Exchanges Are Building Their Own Blockchain
The emerging trend of exchange-built blockchain platforms is a move to build a moat around their respective businesses and grow their market share and operate more efficiently. Developing a blockchain allows an exchange to have more flexibility from a usability and trading offering perspective without the need of a centralized operator. Plus they stand to benefit from a rise in their native token value if their bets pay off.

Caitlin Long: Collapsing dollar will lead to crypto adoption
Caitlin Long believes the COVID-19 crisis could cause a collapse in the dollar, forcing people to rethink the real value underlying their assets. According to her, the dollar is going to encounter a “short squeeze of staggering proportions.”

Embedded supervision: how to build regulation into Libra 2.0 and the token economy
Taking the example of the revised proposal for the Libra global stablecoin, this column describes how supervisors could harness information in distributed ledger based-finance via “embedded supervision.” The aim is to increase the quality of data available to supervisors and reduce administrative costs for firms. The policy note concludes by discussing legislative and operational ways to promote low-cost supervision and a level playing field for small and large firms.

Safaricom and Visa join forces
Kenya’s Safaricom and Visa are partnering to develop products that will support digital payments for M-PESA customers.

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Kiffmeister’s Fintech Daily Digest (04/29/2020)

11 Lawmakers Urge US Treasury to Consider Blockchain for COVID-19 Relief
Eleven members of Congress are calling on the U.S. Treasury Department to look at new technologies, including blockchain and distributed ledger technology, to help streamline how cash and supplies are distributed under a federal law trying to boost the economy during the COVID-19 crisis. The letter points to China’s rollout of its own blockchain system as an example of other nations pursuing the same technology.

G20 and the BIS Innovation Hub launch TechSprint Initiative to address financial regulatory & supervisory challenges
The G20 and the Bank for International Settlements Innovation Hub launched the G20 TechSprint Initiative to highlight the potential for new technologies to resolve regulatory compliance (RegTech) and supervision (SupTech) challenges. The BIS Innovation Hub published high-priority RegTech/ SupTech operational problems and invited private firms to develop innovative technological solutions. The problem statements identify challenges in regulatory reporting, analytics, and monitoring and supervision, and have been developed from submissions received from Financial Stability Board member jurisdictions.

WhatsApp considers offering loans to users through mobile payments feature
WhatsApp has ambitions to launch a money-lending service to users in India, according to a regulatory filing. It already has a mobile payments platform called Pay that is rolling out to users in the country, through which the loans could be issued. The filing outlined plans to “advance money or give credit on such terms as may seem expedient, and with or without security, to customers and others.”

Target, General Mills Getting Look In At Hedera Blockchain Technology Through Couponing
The Coupon Bureau is a non-profit, industry-managed coupon data exchange technology platform that works with many of the largest players in the retail ecosystem. The decision to use Hedera Consensus Service to provide a real-time, tamper-proof log for all coupon events on its platform, will allow coupon providers, manufacturers, clearinghouses, and retailers the ability to validate in real-time when coupons are registered and redeemed on the platform, without having to trust any single party.

Stripe Launches Card Issuing Services for Businesses in the US
Stripe has rolled out a new card issuing product in the U.S., allowing businesses to create, manage and distribute tailored virtual and physical cards to their customers and employees. Stripe Issuing is an API that allows businesses to issue cards on a self-serving basis. These programmatic cards can be set up quickly and come embedded with capabilities to give flexibility and cater to different needs.

Telegram’s Blockchain OS Could Soon Appear in App Stores
The Telegram Open Network (TON) operating system (OS), an end-to-end open-source infrastructure that allows developers and users to work with the TON blockchain, will reportedly soon be available on smartphones and personal computers for mainstream users. TON OS is not an alternative to existing operating systems, but will serve as an add-on for devices, making them able to support blockchain applications. This is despite Telegram’s ongoing legal battle against the U.S. SEC. (Telegram is seeking to appeal a U.S. federal court’s ruling in favor of the SEC to halt the distribution of the platform’s native Gram tokens.)

Creating a Better Supply Measurement: Introducing Free Float Supply
Coin Metrics recently announced the CM Free Float Supply, a new metric that is being developed to more accurately represent the supply of an asset available to the market. By applying a standardized approach, this metric represents a cross blockchain unified portrayal of the crypto market’s liquidity. For greater detail on the rationale for the methodology decisions that make up CM Free Float Supply. CM Free Float Supply overcomes the challenges of misrepresenting supply by restricting categories of token holders that do not provide liquidity to markets.

Bitcoin ‘stock-to-flow’ model predicts bullish price outcome post halving
Stock-to-flow is a ratio that measures a commodity’s outstanding stock against fresh market inflows. For Bitcoin, this model has been used to predict astronomical price rises following the upcoming third Bitcoin halving. While some Bitcoiners cling to this model as mathematical proof that “number go up,” others are certain that the halving is already “priced in.”

What is Synthetix? A 3-minute guide to the trading platform
Synthetix is a token trading platform built on Ethereum. It allows to creation of real world assets, like stocks and shares to be bought and traded using crypto. Synthetix started as a stablecoin project called Havvenout, before pivoting to DeFi. Much of Synthetix’ recent success can be attributed to its innovative token incentive model. SNX holders stake SNX in return for fees from the Synthetix exchange and rewards from the system’s inflationary monetary policy.

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Kiffmeister’s Fintech Daily Digest (04/28/2020)

China starts major trial of state-run digital currency
Trials of China’s CBDC have reportedly started in several cities, with some public servants in Shenzhen, Suzhou, Chengdu and Xiong’an now receiving their salaries in CBDC already.

The People’s Bank of China Extends Fintech Regulatory Pilot Project to Seven Cities
The People’s Bank of China will expand its fintech regulation pilot program, first launched in Beijing in December, to six more cities to further explore inclusive, prudent and flexible trial-and-error innovation. The pilot will guide financial institutions and fintech firms in exploring the use of information technologies to supporting small firms with funding difficulties and facilitating inclusive financing.

Protecting the continuity and safety of payments during the coronavirus crisis
“A high-level ECB task force is currently examining the pros and cons of introducing a digital euro, which could be used by intermediaries or even by citizens through their electronic devices for their day-to-day spending needs. However, our analysis of the opportunities and challenges of CBDC should not discourage or crowd out market-led initiatives aimed at introducing private electronic means of payment with similar features in terms of user needs.”

Blockchain to tackle supply chain failures exposed by COVID-19 and boost economic recovery
The World Economic Forum published a Blockchain Deployment Toolkit for building more resilient supply chains. The 244-page report includes checklists, guided questions, explainers and risk assessments addressing tax concerns and data privacy; forming a consortium, its ecosystem and governance; public vs private chains; cybersecurity; interoperability; and digital identity, among other concerns.

IBM Aims To Streamline COVID-19 Supply Procurement Via Blockchain
To help government units and healthcare organizations discover non-traditional suppliers who have changed course to address the shortage of supplies needed for COVID-19 relief efforts, IBM unveiled a blockchain-based network called IBM Rapid Supplier Connect.

Cross-Border Payment Portal Is Joins Libra Association will join the Libra Association in developing its series of stablecoins. Libra was announced last year as an effort to create a single global currency that could expand financial services to anyone who had a smartphone and an internet connection, though some of these ambitions have since been scaled back.

Libra’s Disparte on big tech’s move into digital currency
Libra Association vice-chair Dante Disparte speaks about the decision to abandon a multi-currency reserve, stress-testing a global payment network and how the Facebook-led body still has 3 billion customers in its sights.

Digital Disruption in Banking and its Impact on Competition
According to the OECD, competition will increase as new players enter the industry, but the long-term impact is more open, and regulation shall decisively influence to what extent BigTech shall enter the industry and who shall be the dominant players. Pursuant to OECD’s view, the challenge for regulators will be to keep a level playing field that strikes the right balance between fostering innovation and preserving financial stability where the consumer protection concerns rise to the forefront.

Congress Has Now Introduced 32 Crypto And Blockchain Bills
Members in the House of Representatives and U.S. Senators have introduced a total of 32 crypto- and blockchain-related bills in the 116th Congress. Thanks to Facebook’s introduction of Project Libra, ongoing efforts to achieve regulatory clarity for the industry, and the novel concept of a U.S. digital dollar, the level of interest on Capitol Hill appears to have grown beyond what has typically been just a handful of legislators.

Bitcoin’s ‘Most Volatile Day’ Prompts Exchanges to Make Changes
For now, the largest crypto exchanges are not changing their leverage policies, but they are making other tweaks. Huobi instituted a flavor of a circuit breaker: Instead of halting trading, the software will halt liquidation orders on positions where the margin ratio is less than or equal to zero when abnormal price deviation between the market price and liquidation price is identified. The exchange has also begun doing partial liquidations.

The Arab Monetary Fund Launches Guidelines on Digital Identity and e-KYC for the Arab Region
The Arab Monetary Fund published the Arab Regional Fintech Working Group’s Digital Identity and Electronic Know Your Customer (e-KYC) Guidelines for the Arab Region.

Argentinians are Increasingly Using Online and Mobile-based Apps for Everyday Transactions
In Argentina, where most people prefer to make cash payments, a strict nationwide lockdown (due to COVID-19) has forced local consumers into considering digital banking and online payments options.

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Kiffmeister’s Fintech Daily Digest (04/27/2020)

The Eastern Caribbean Central Bank is Scheduled to Launch Its CBDC Pilot in June 2020
In mid-March 2020, Bitt and the ECCB conducted preliminary testing of the DXCD CBDC applications with select stakeholder groups in St. Kitts and Nevis, Antigua and Barbuda, and Grenada. A full-blown pilot is scheduled to launch in June 2020.

Embedded supervision: How to regulate Libra 2.0 and the token economy
The rise of stablecoins and asset-backed tokens could drive the development of financial markets via new forms of transparency and data credibility. This column uses the revised proposal for the Libra global stablecoin as an example to illustrate possibilities for supervisors to harness information in distributed ledger based-finance via ‘embedded supervision’. The aim is to increase the quality of data available to supervisors and to reduce administrative costs for firms.

The Postal Service should be allowed to deliver low-cost financial services to poor and rural communities
U.S. Senator Kirsten Gillibrand introduced the Postal Banking Act that would grant the U.S. Postal Service (USPS) the power to provide basic financial services, including low-cost small loans, small checking accounts and interest-bearing savings accounts (alone or in partnership with depository institutions), transactional and remittance services, and other basic financial services in the public interest. However, the USPS would not be granted a bank charter, or become an insured depository institution.

The Netherlands’ AMLD5 Interpretation Appears to Be Killing Crypto Firms
The Dutch crypto market is seeing the first of most likely many small crypto exchanges get squeezed out following the passage of its strong anti-money laundering (AMLD5) regulations. Small crypto firms allege that they are a de facto licensing regime whereas AMLD5 calls for mere registration of crypto firms.

Grayscale is buying half of all newly mined Ethereum
Grayscale operates an Ethereum Trust focused on institutional investors. In 2020, it has been building up its Ethereum holdings at a faster rate. It has purchased an amount of Ethereum equivalent to half of the new supply of coins in 2020.

Blockchain-Based ‘Smart’ Warehouse to Improve Customs Clearances
MVC Global and Cox Logistics Group are launching the blockchain-based SmartHub logistics warehouse to improve the distribution of pharmaceuticals across the Gulf Cooperation Council. SmartHub will to speed up and improve storage distribution of food products and medical supplies in the region, and significantly cut the time spent on paperwork, administration and bureaucracy.

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Kiffmeister’s Fintech Daily Digest (04/26/2020)

Why Chris Giancarlo Considers A Digital Dollar Mission-Critical For The World
Ex-CFTC Chair Chris Giancarlo explains his future vision of digital dollars as well as what defines a digital dollar. He believes the digital dollar is bigger than any one issue and is about who owns the future, and the Digital Dollar Project is neutral on monetary policy.

Digimentality: Fear and Favoring of Digital Currency
Going cashless offers societal benefits. Among them are lower costs due to reduced production and handling of coins or banknotes and better financial tracking that can resolve tax gaps and expose shadow economies, International exchange and remittance could also be simplified as digital economies hold promise for unbanked or underserved populations. But the topic is divisive due to clashing stakeholder interests, not to mention risks around data privacy or cyber security.A 2020 survey from The Economist Intelligence Unit sought to uncover more granularity on what those divisive issues are from a user-base perspective.

The dForce and Hegic DeFi exploits, and why Smart Contracts are bad
The problem with smart contracts is that by design they’re hard or impossible to alter, which requires the most painstaking code review and analysis so that you don’t lose money to an exploit, but you make more money by being quick to market. DeFi apps that use chains of smart contract programs to automate complex financial transactions enable attacks to be chained too. Unsurprisingly, it’s a continuing dumpster fire, reliably delivering comedy gold. The problem with DeFi is not the technology, though that’s bad too — it’s that people are greedy and foolish.

Malta’s Financial Services Authority warns unlicensed virtual financial assets companies
Malta initiated legislation to regulate virtual financial assets in 2018 and invited companies to operate on the island during the transitory phase that ended at end-October 2019, after which they were supposed to register. Six months after the deadline, 57 of the 83 companies which responded to the call have not applied for licensing, despite the Malta Financial Services Authority’s multiple reminders to them since November 2019. The MFSA is still reviewing the other 26 applications. /

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Kiffmeister’s Fintech Daily Digest (04/25/2020)

Libra still needs more baking
Barry Eichengreen argues that while the new Libra white paper improves on the first one, it has done nothing to address worries about currency substitution.  Also a new proposed capital buffer is underspecified, a key market in Libra futures or forwards is missing, as is a Libra lender of last resort.

PayPal Check-Cashing Fees Waived for Government-Issued Stimulus Checks
Americans who received paper stimulus checks can quickly deposit them into their bank accounts using PayPal’s cash-a-check feature for free until May 31. PayPal usually charges a 1% fee to cash payroll and government checks.

Central bank digital currency: Central banking for all
This column explores CBDC implications using a classic banking model. With sufficient competition, a CBDC can be beneficial and achieve the optimal allocation of funds. However, it also risks giving central banks excessive monopoly power, which could result in inferior outcomes.

Telegram hits 400 million users while SEC prevents TON launch
Telegram has hit 400 million unique monthly users, but due to an ongoing court case with the SEC, users won’t have direct access to the Telegram Open Network. If the TON doesn’t launch by April 30 its investors are entitled to refunds totalling $1.7 billion.

The New York Inclusive Value Ledger: A P2P Savings & Payments Platform
The paper’s “inclusive value ledger” is a payments system, including digital wallets and a smartphone app, intended to reduce the role of banks as middlemen and address the unbanked and underbanked as well as marginalized communities. Banks, including their ATMs, and payment firms like Paypal and Venmo would be required to interoperate with the IVL currency. The paper suggested that the IVL system could be used for New York State residents to receive state tax credits, pensions and government benefits, and pay for taxes and licenses via a pooled “Master Account”.

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Kiffmeister’s Fintech Daily Digest (04/24/2020)

China’s National Blockchain Will Change the World
China is launching the Blockchain-based Services Network which will be the backbone infrastructure technology for massive interconnectivity throughout the mainland and to the Digital Silk Road to provide interconnectivity to all of China’s trade partners around the globe. The BSN will be a new internet protocol to allow a more efficient way to share data, value and digital assets in a completely transparent and trusted way between anyone who wants to be a node on the network.

Cryptocurrency = property = legal protection
The UK Jurisdiction Taskforce’s Legal Statement on the Status of Cryptoassets and Smart Contracts is proving to be influential both domestically and internationally for its analysis of the legal status of cryptocurrency.  The Legal Statement recognised that the design of cryptoassets may create some practical obstacles to legal intervention but “that does not mean that crypto assets are outside the law”.  This is now developing into a trend.

AVA Labs Will Splash Millions to ‘Brain Merge’ DeFi and Traditional Finance
Founded by Cornell professor Emin Gun Sirer, who has previously worked on a scaling solution for bitcoin, AVA had been in private testnet for over a year. It originally had been slated for launch as early as December but this was pushed back until April. The project is now aiming for a full launch sometime in July, according to its roadmap.

BIS on computing platforms for big data analytics and artificial intelligence
Public authorities, and central banks in particular, are increasingly realising the potential of big data sets and analytics – with the development of artificial intelligence and machine learning techniques – to provide new, complementary statistical information. Yet the question remains: how should institutions organise themselves to benefit the most from these opportunities?

Twins: Calibra’s White-Glove Approach for BFT Testing
Byzantine Fault Tolerant (BFT) systems have seen extensive study for more than two decades, yet we lack a principled strategy for testing BFT implementations. This paper presents Twins, a new approach for testing BFT systems.

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Kiffmeister’s Fintech Daily Digest (04/23/2020)

Starbucks, McDonald’s Among 19 Firms to Test China’s Digital Yuan: Report
Starbucks and McDonald’s are reportedly among 19 restaurants and retail shops that will be involved in testing China’s central bank digital currency in the country’s Xiong’An new district.

Will Libra Live Up To Its Initial Ambitions?
According to Binance, Libra’s envisioned global payment system could do to the payment industry what SpaceX did to the space industry: shake the foundations of a well-established sector with high entry barriers. The mere advantage of issuing widely-available programmable money would already initiate manifold efficiency gains.

As Libra pivots, members jump ship for Celo
Although Celo and Libra share a similar mission – both want to help create prosperity – but Celo is a completely decentralized collective of mission-aligned organizations. “There’s no central governing body to determine how Celo will evolve, and people will be able to vote on how Celo evolves.”

Stablecoin On-Chain Activity Grows 800% in a Year
The on-chain activity for stablecoins has increased 800% in the last 12 months according to market intelligence firm TokenAnalyst.

Stablecoins Are Booming, But What Are The Tax Consequences?
From a U.S. tax perspective, there are no distinct rules applicable to stablecoins; stablecoins are treated as “property” under IRS Notice 2014-21, similar to any other cryptocurrency like bitcoin and ether.

Issue digital cash or lose trust in money, report warns
This “Positive Money” report explains how a central bank digital currency could be introduced to give policymakers more effective tools to support the economy, particularly during times of crisis such as the coronavirus pandemic, while maintaining financial stability.

CBDC: Considerations for the Digital Euro
While the development of a digital Euro will likely take extensive planning, the potential merits further exploration. This report explores the various technical choices and their benefits or deterrents. It concludes that a blockchain based CBDC has the potential to greatly improve speed, security, privacy, and efficiency. The decentralised nature of blockchain, while difficult to implement with a centralised financial system, provides enough new possibilities that it merits serious consideration.

Digital Dollars Can Reduce Unemployment, Here’s How
@MMPrts proposes a unique CBDC that reverses the process by which money is created and put in circulation. The “MttP” would be issued by employers as wages. Banks would have to accept payments in MttP or exchange MttPs for dollar balances in bank accounts at face value. Banks would redeem MttPs at the central bank in exchange for reserves.

IMF on Digital Solutions for Direct Cash Transfers in Emergencies
Digital solutions for direct cash transfers help to identify and validate intended beneficiaries, make payments in a timely and secure manner, and ensure transparency and accountability by providing a reliable audit trail and publishing timely data.

BitMEX behind bitcoin Black Thursday bounce?
One of the main protagonists in the fateful crash on March 12 is BitMEX, which suffered a distributed denial-of-service (DDoS) attack on the worst day imaginable. Ironically, that attack may have helped stop and even reverse part of bitcoin’s price plunge.

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Kiffmeister’s Fintech Daily Digest (04/22/2020)

LendingClub slashes roughly 30% of workforce as Covid-19 dampens demand for loans
U.S. online lender Lending Club says it will lay off about 30% of its workforce with CEO, Scott Sanborn, saying that COVID-19 is having an “unprecedented effect” on consumers and small businesses, resulting in a reduction in demand for personal loans.

Tigo Tanzania simplifies mobile money services across the East Africa region
Tanzania’s leading digital lifestyle company, Tigo Tanzania (, launched a service that allows all Tigo Pesa customers to send and receive cash on their mobile money wallets from M-PESA in Kenya, MTN in Uganda and MTN and Airtel in Rwanda.

Toronto Centre virtual executive panel on COVID-19: Supervising the New Normal
At an April 17 Toronto Centre virtual executive panel on COVID-19 panellists discussed global stablecoin developments. The panel included the IMF’s Tobias Adrian and Aditya Narain, plus World Bank, FSB and BIS senior officials.

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Kiffmeister’s Fintech Daily Digest (04/21/2020)

The PBOC confirms its CBDC pilot plans
The People’s Bank of China has confirmed that it aims to roll out internal tests for the national digital currency (DECP) in Shenzhen, Suzhou, Xiong’An and Chengdu. The same four cities were named on a registration page for the test application. PBoC did not give a clear schedule for the projects. However, the bank said it plans to run another internal test during the Winter Olympic Games hosted in Beijing in 2022.

DNB: Digital currency issued by central banks can protect public interests in payment systems
The Dutch central bank (DNB) said it would like to experiment with a digital currency issued by itself and other European central banks, as the use of cash rapidly diminishes.

World Fintech Report 2020: “Traditional banks are at a critical juncture
The European Financial Management Association and Capgemini World Fintech Report 2020 reveals a wide gap between what customers expect and what traditional banks currently deliver. It notes that data-fuelled and hyper-personalised experiences in real-time have led Big Techs and challenger banks to demonstrate their ability to win customers over.

Assessing the Long-Term Fallout from Crypto’s Black Thursday
Since the March 12 crypto crash there has been a reshuffling of the top futures marketplaces for crypto assets with BitMEX losing some of its market share to Binance. This may have an on-going impact across crypto markets, especially considering BitMEX’s outsized influence on price discovery. Only time will tell if BitMEX is able to recover the lost market share, or if the marketplace is undergoing a true changing of the guard.

N26 battens down the hatches
German digital bank N26 is preparing for the worst downturn in its seven-year history, cutting back on advertising spending, furloughing a tenth of its staff and reassessing the timing of its plan to launch in Brazil. The moves are designed to shield Berlin-based N26 from the coronavirus crisis, which threatens to be the toughest test for many of the fintech start-ups that sprung up after the 2008 financial crisis, seeking to challenge the traditional banking industry.

A Framework for Exploring Blockchain Technology in Supply Chain Management
The purpose of the study is to identify and explore different applications of blockchain technology in supply chain management and suggest a framework for their analysis. The study addresses researchers’ conflicting opinions regarding the hype of blockchain and clarifies which minor applications are hyped and which are currently more applicable.

Synthetix Is Already Tokenizing Real World Markets Through DeFi
Synthetix offers its own stablecoin, sUSD, but it also expands the concept into many other types of assets and tokens. For example, it offers “inverse” tokens which can be used to short-sell a crypto asset.

Bitnomial gets nod from CFTC to launch Bitcoin derivatives exchange
The CFTC has approved Bitnomial’s application for a bitcoin derivatives exchange. Initial products will be Bitcoin futures, mini Bitcoin futures, and Bitcoin options. All contracts will be physically settled in Bitcoin.

Futureswap: 20x Leverage on Ethereum
Futureswap is a decentralized exchange that allows traders to enter into perpetual futures with up to 20x leverage while liquidity providers can earn fees and interest. The platform is governed by the community, which is powered by an underlying governance (FST) token that allows anyone to propose new exchanges or changes in the system.

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