Coinbase Builds Offshore Presence For Derivatives; Wholesale CBDCs Get A Global Test

offshore expansion

Coinbase said yesterday that it was expanding its global product mix as its Coinbase International Exchange had “received regulatory approval from the Bermuda Monetary Authority (BMA) to enable perpetual futures for eligible non-US retail customers.” Read more.

Back in May, Coinbase had announced it was setting up shop in Bermuda and looking to fill a hole in crypto derivatives market that Bahamas-based FTX had dominated until its demise last November.

Between the lines, the challenging regulatory environment in the United States which may have forced Coinbase to move beyond its home base’s borders.

cross-border CBDCs

A new test of cross-border wholesale Central Bank Digital Currencies (CBDCs) was trumpeted yesterday by the Bank of International Settlements. Read the press release from one of the partners – the Monetary Authority of Singapore.

The test known as Project Mariana was “a proof of concept [and] successfully tested the cross-border trading and settlement of hypothetical euro, Singapore dollar and Swiss franc wCBDCs between simulated financial institutions.” Read more about Project Mariana and its findings on the BIS website here.

Many countries are undertaking a CBDC “Project” these days. In the United States, “Project Hamilton” has been a U.S. project coordinated by the Federal Reserve Bank of Boston and the Massachussetts Institute of Technology.

more tips:

Wholesale CBDCs and automatic market makers could be the perfect pair, BIS finds – Blockworks

ETH futures ETF

Fox Business reporter Eleanor Terrett reports that tomorrow Valkyrie Investments will be approved by the Securities and Exchange Commission (SEC) to offer a first-ever Ethereum Futures ETF (Exchange-Traded Fund).  Terrett adds, “The Nashville-based asset manager is the first of nine issuers to win approval from the [SEC]to give investors the opportunity to bet on the future price of the world’s second-largest digital asset through a so-called ETF.”

She breaks down the entire crypto ETF landscape as it collides with the SEC here.

James Seyffart, ETF reporter at Bloomberg, adds more detail on X, “[Valkyrie Funds] ticker is $BTF and it will begin holding a small % of ETH futures tomorrow (less than 10%). Will switch to 50% ETH 50% BTC next week. Other ETH futures ETFs will launch next week likely Monday….”

On a related note, on Tuesday, a bipartisan group of House Financial Services Committee members urged SEC Chair Gensler to issue expedited approval of applications for Bitcoin spot market Exchange-Traded Products (or Funds). See the letter.

real-world assets (RWA)

The acronym for “real world assets” is RWA. Keep it in mind as banks are eyeballing the opportunity to tokenize RWAs in a big way using the public blockchain.

JPMorgan’s head of Onyx Digital Asset at JPMorgan gets into the weeds and explains to CoinDesk about solutions available today,“You still get the benefits of having a highly redundant, ever-persistent settlement rail in the public blockchain, but you have the ability to operate in a more controlled environment with AML KYC [anti-money laundering, know-your-customer] requirements, for instance. So a smaller set of participants are validating transactions or are privy to those transactions, without necessarily exposing all of that to the full public ecosystem.” Read about the implications.

search and seizure

Web3 pathways are trackable. Very. Just ask Sam Curry, who is a security engineer at blockchain technology company Yuga Labs. He told TechCrunch this week about how he was detained this month by authorities and had his unlocked mobile phone searched by the Internal Revenue Service when arriving at Dulles in Washington, D.C. from Japan. According to the article, no warrant is necessary when returning from a foreign country. Curry explains that back in December he had been trying to assist with the dismantling of a phishing campaign and his home IP address had led authorities to believe he was involved in the crime.

At first, Curry was served a grand jury subpoena (at the airport!), but “he later received confirmation that the copy of his device data was deleted and the grand jury subpoena was canceled once prosecutors realized that Curry was investigating the theft of crypto, and not involved in it.” Read more.

stablecoin ‘regime change’

Castle Island Ventures crypto investor and pundit Nic Carter (he was the first to publicly discuss “Choke Point 2.0” in the U.S. back in February) made a presentation titled “Regime Change in the Stablecoin Market” at the recent Token 2049 conference in Singapore.

He begins with an argument of how Eurodollars (established in the 1950s – define) may be a precursor for the way the stablecoin market plays out globally. Carter calls it “Crypto-Eurodollarization” and says, “People do want USD ‘stables,’ but the US is a hostile place for them right now.  And you’re going to continue to see those USD stables being issued overseas in places like Singapore, Hong Kong, Bermuda, Dubai – because entrepreneurs have that desire to create these products, and create valuable experiences for their clients, but they’re stymied in the United States.”

He continued, “And, this is my big prediction – again, taking it back to Eurodollars: once that [Eurodollar] market reached sufficient size in the early 70s, the U.S. Central Bank had no choice but to create swap lines with their counterparties in the Eurodollar market.  If you look at inflated adjusted [market of stablecoins today], it’s the equivalent of 1967 in the Eurodollar market. We haven’t quite reached that inflection point.. but that will come…”

See the presentation on YouTube

still more tips

New co-sponsor for Digital Asset Money Laundering Act (Sept. 27): Sen. Ben Ray Lujan (D, NM) – Teams Up with PayPal and Paxos to Further Enable PayPal USD (PYUSD) – press release

A16z Crypto leads $16.8 million seed round for web3 startup IYK which creates “digi-physical experiences” – The Block

Crypto Exchange Kraken Plans to Offer Trading in US-Listed Stocks – Bloomberg

Idris Elba Is Ready to Talk About Crypto – Wired