Kiffmeister’s #Fintech Daily Digest (01/18/2022)

Binance Spoofy Bots Cause Mass Liquidations

Carol Alexander does a very thorough forensic analysis of the how price manipulation bots caused mass Binance Liquidations on July 26, 2021. She concludes that Binance doesn’t offer its clients sufficient protection against professional traders running market-making spoofing bots that would be against the law on properly regulated exchanges; and this manipulative activity on spills over to other exchanges so that Binance now presents a systemic risk to the entire crypto asset ecosystem. [Read more]

The Role of Binance in Bitcoin Volatility Transmission

Carol Alexander has also published a paper that found that the tether-margined perpetual contract on Binance (the culprit in the July 26, 2021 story) continuously transmits strong flows (and volatility) to all other instruments. It also found that (i) during US trading hours, traders pay more attention and are more reactive to prevailing market conditions when updating their expectations and (ii) the crypto market exhibits a higher interconnectedness when traditional Western stock markets are open. [Read more]

All of this implies that  regulators should not only consider spot exchanges offering bitcoin-fiat trading but also the tether-margined derivatives products available on most unregulated exchanges like Binance.

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Central Bank Digital Currency Workshop, hosted by the CBDC Think Tank 

The CBDC Think Tank (CBDCTT)  is hosting an in-person CBDC Workshop in Washington DC on February 24. It’s an intensive and hands-on CBDC course for central bank leadership and staff that are looking to understand and position for CBDCs. The workshop is a mix of lectures from CBDC experts and hands-on exercises. Certification of completion will be provided by the CBDCTT. Note that it is open only to staff from the official sector, such as central bank and finance ministry staff! [Register here]