US CFTC issues letter on digital asset derivatives, clearing compliance in 3 areas

May 30, 2023 Coin Telegraph

CFTC

The letter is a reminder, but a highly specific one that is reminiscent of the SEC’s recent custody rule proposal in part.

The United States Commodity Futures Trading Commission (CFTC) has issued a staff advisory letter to registered derivatives clearing organizations (DCOs) and DCO applicants, reminding them of the risks associated with expanding the scope of their activities. The letter from the CFTC Division of Clearing and Risk (DCR) specifically addressed digital assets.

Staff advisory letters can remind addressees of their legal obligations or provide clarity on those obligations. The “DCR expects DCOs and applicants to actively identify new, evolving, or unique risks and implement risk mitigation measures,” it said, continuing:

“Over the past several years, DCR has observed increased interest […] in expanding the types of products cleared and business lines, clearing models, and services offered by DCOs, including related to digital assets.”

The DCR said it will emphasize compliance in three areas: system safeguards, conflicts of interest and physical deliveries. Systems safeguards require attention because of the “heightened cyber and other operational risks” associated with digital assets. Potential conflicts of interest were seen in “dependencies on affiliated entities or services (i.e., dual-hatted executives, shared systems and resources, etc.).”

“Physical delivery” is used in the letter in its technical sense to mean the transfer of ownership rights — that is, transferring digital assets from one account or wallet to another. This concern, in part, mirrors the U.S. Securities and Exchange Commission’s reported plans to propose a new rule that would impact crypto firms serving as custodians of their clients’ assets. That proposal brought on harsh criticism in the crypto sector.

Today the CFTC’s Division of Clearing and Risk issued a staff advisory on the risks associated with expanding the reach of Derivatives Clearing Organizations (DCO) to clear digital assets. Learn more: https://t.co/9lEPMVXB1W
— CFTC (@CFTC) May 30, 2023

Alexander Grieve, vice president of the Tiger Hill Partners communications firm, noted in a tweet that Bitnomial has a DCO application before the CFTC. LedgerX, recently purchased by MIAX from FTX, is also a CFTC-regulated clearinghouse.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

Bitcoin, Ethereum bears are back in control — Two derivative metrics suggest

May 21, 2023 Coin Telegraph

bitcoin options

Given the uncertainty in the macroeconomic environment, Bitcoin price bulls have no reason to bet against a six-week descending wedge pattern.

A bearish market structure has been pressuring cryptocurrencies’ prices for the past six weeks, driving the total market capitalization to its lowest level in two months at $1.13 trillion. According to two derivative metrics, crypto bulls will have a hard time to break the downtrend, even though analyzing a shorter timeframe provides a neutral view with Bitcoin (BTC), Ether (ETH) and BNB, on average, gaining 0.3% between May 12 and May 19.

*Total crypto market cap in USD, 12-hour. Source: TradingView*

Notice that the descending wedge formation initiated in mid-April could last until July, indicating that an eventual break to the upside would require an extra effort from the bulls.

Furthermore, there’s the impending U.S. debt ceiling standoff, as the U.S. Treasury is quickly running out of cash.

Even if the majority of investors believe that the Biden administration will be able to strike a deal before the effective default of its debt, no one can exclude the possibility of a government shutdown and subsequent default.

Gold or stablecoins as a safe haven?

Not even gold, which used to be considered the world’s safest asset class, has been immune to the recent correction, as the precious metal traded down from $2,050 on May 4 to the present $1,980 level.

Circle, the company behind the USDC stablecoin, has ditched $8.7 billion in Treasuries maturing in longer than 30 days for short-term bonds and collateralized loans at banking giants such as Goldman Sachs and Royal Bank of Canada.

According to Markets Insider, a Circle representative stated that:

“The inclusion of these highly liquid assets also provides additional protection for the USDC reserve in the unlikely event of a U.S. debt default.”

The stablecoin DAI, managed by the decentralized organization MakerDAO, approved in March an increase to its portfolio holdings of the U.S. Treasuries to $1.25 billion to “take advantage of the current yield environment and generate further revenue”.

Derivatives markets show no signs of bearishness

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours.

A positive funding rate indicates that longs (buyers) demand more leverage. Still, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

*Perpetual futures accumulated 7-day funding rate on May 19. Source: Coinglass*

The seven-day funding rate for BTC and ETH was neutral, indicating balanced demand from leveraged longs (buyers) and shorts (sellers) using perpetual futures contracts. Curiously, even Litecoin (LTC) displayed no excessive long demand after a 14.5% weekly rally.

To exclude externalities that might have solely impacted futures markets, traders can gauge the market’s sentiment by measuring whether more activity is going through call (buy) options or put (sell) options.

*BTC options volume put-to-call ratio. Source: Laevitas.ch*

The expiration of options can add volatility to Bitcoin’s price, which resulted in an $80-million advantage for bears in the latest May 19 expiry.

A 0.70 put-to-call ratio indicates that put option open interest lags the more bullish calls and is, therefore, bullish. In contrast, a 1.40 indicator favors put options, which can be deemed bearish.

The put-to-call ratio for Bitcoin options volume has been below 1.0 for the past couple of weeks, indicating a higher preference for neutral-to-bullish call options. More importantly, even as Bitcoin briefly corrected down to $26,800 on May 12, there was no significant surge in demand for the protective put options.

Glass half full, or investors prepping for the worst?

The options market shows whales and market makers unwilling to take protective puts even after Bitcoin crashed 8.3% between May 10 and May 12.

However, given the balanced demand on futures markets, traders seem hesitant to place additional bets until there’s more clarity on the U.S. debt standoff.

Less than two weeks remain until June 1, when the U.S. Treasury Department has warned that the federal government could be unable to pay its debts.

It is unclear whether the total market capitalization will be able to break from the descending wedge formation. From an optimistic perspective, professional traders are not using derivatives to bet on a catastrophic scenario.

On the other hand, there seems to be no rationale for th bulls to jump the gun and place bets on a speedy crypto market recovery given the uncertainty in the macroeconomic environment. So, ultimately, bears are in a comfortable place according to derivatives metrics.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

How are Bitcoin options traders positioning for the US banking crisis?

May 4, 2023 Coin Telegraph

Banks

The total crypto market cap has been ranging sideways, but Bitcoin derivatives markets indicate pro traders don't expect any major price corrections.

For the past 14 days, cryptocurrency markets have been trading within an unusually tight 7.1% range. In other words, investors are unwilling to place new bets until there’s additional regulatory clarity, especially in the United States.

The total crypto market capitalization fell by 1% to $1.2 trillion over the seven days ending May 4, primarily as a result of Bitcoin's (BTC) 1.1% price decline, Ether's (BTC) 0.2% loss, and BNB trading down 1.4%.

Notice that the exact same $1.16 trillion to $1.22 trillion total market cap range previously stood for twelve days between March 29 and April 10. The conflicting forces: regulatory uncertainty weighing it down and the banking crisis pushing prices upward are likely the reason for the lack of risk-appetite on both sides.

SEC’s crypto crackdown could backfire

The Coinbase exchange, for instance, has been battling the U.S. Securities and Exchange Commission (SEC) regarding the need for clear rules for trading digital assets. The stakes were raised after the exchange was handed a Wells notice, a "legal threat" for "possible violations of securities laws", on March 22.

However, the latest decision has been favorable to Coinbase, as the court has instructed the SEC to clarify the security rules for digital assets within ten days.

On the other hand, the banking crisis seems not to have faded after the lender PacWest Bancorp reportedly announced that it was considering a buyout. The regional financial institution held $40 billion in assets, although some 80% of the loan book is dedicated to the commercial real estate and residential mortgages — a sector that has been plagued by rising interest rates.

The recent crypto sideways trend suggests that investors are hesitant to place new bets until there’s more clarity on whether the U.S. Treasury will continue injecting liquidity to contain the banking crisis, which favors inflation and positive momentum for scarce assets.

BTC, ETH derivatives show muted demand from bears

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

*Perpetual futures accumulated 7-day funding rate on May 4. Source: Coinglass*

The seven-day funding rate for Bitcoin and Ether was neutral, indicating balanced demand from leveraged longs (buyers) and shorts (sellers) using perpetual futures contracts. BNB was the only exception, as shorts have been paying 1.4% per week to keep their positions open indicating bearishness.

To exclude externalities that might have solely impacted futures’ markets, traders can gauge the market's sentiment by measuring whether more activity is going through call (buy) options or put (sell) options. Generally speaking, call options are used for bullish strategies, whereas put options are used for bearish ones.

The expiration of options can have a significant impact on the market, particularly if there are a large number of contracts involved. When options contracts expire, the holders of these contracts may choose to exercise their rights, which can result in buying or selling pressure on the underlying asset. This can lead to increased volatility in the price of Bitcoin, which resulted in a $575 million advantage for bulls in the latest April 28 expiry.

A 0.70 put-to-call ratio indicates that put option open interest lags the more bullish calls and is, therefore, bullish. In contrast, a 1.40 indicator favors put options, which can be deemed bearish.

The put-to-call ratio for Bitcoin options volume has been below 0.90 since April 26, indicating a higher preference for neutral-to-bullish call options. More importantly, even as Bitcoin briefly corrected down to $27,700 on May 1, there was no significant surge in demand for the protective put options.

Traders pricing low odds of a break above $1.2T

The option market shows whales and market makers unwilling to take protective puts even after Bitcoin crashed 7.8% on May 1. However, given the balanced demand on futures markets, traders seem hesitant to place additional bets until there’s clarity on whether the U.S. Treasury will continue to bailout the troubled regional bank sector.

It is unclear whether the total market capitalization will be able to break through the $1.22 trillion barrier. But one thing is for sure: professional traders are not betting on a crypto price crash given that the demand for protective puts has been muted.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Gemini to launch derivatives platform outside the United States

April 22, 2023 Coin Telegraph

Coin Telegraph

The platform's first derivatives contract will be a BTC perpetual contract denominated in Gemini dollars (GUSD), followed by an ETH/GUSD perpetual contract.

United States-based crypto exchange Gemini announced on April 21 the upcoming launch of a derivatives platform outside the U.S. The move comes amid a tightening and uncertain regulatory environment for crypto firms in the country.

Dubbed Gemini Foundation, the offshore division will offer services to users based in Singapore, Hong Kong, India, Argentina, Bahamas, Bermuda, British Virgin Islands, Bhutan, Brazil, Cayman Islands, Chile, Egypt, El Salvador, Guernsey, Israel, Jersey, New Zealand, Nigeria, Panama, Peru, Philippines, Saint Lucia, Saint Vincent & Grenadine, South Africa, South Korea, Switzerland, Thailand, Turkey, Uruguay, and Vietnam. It will not offer services for customers in the United States.

The platform's first derivatives contract will be a Bitcoin (BTC) perpetual contract denominated in Gemini dollars (GUSD), followed by an ETH/GUSD perpetual contract shortly thereafter.

1/ Introducing Gemini Foundation – a non-US crypto derivatives platform.

Coming soon…https://t.co/HtFHHfAP8d
— Gemini (@Gemini) April 21, 2023

Eligible customers will be able to trade both spot and derivatives products, as well as convert USD and USD Coin (USDC) into GUSD on a 1:1 basis. Fees, profits and losses will also be processed in GUSD. The default leverage is set to 20x, with the maximum possible leverage at 100x.

Unlike traditional futures contracts, perpetual contracts never expire. Perpetual futures trading is not regulated by the Commodity Futures Trading Commission (CFTC). Exchanges offering crypto futures contracts, like BitMEX, are not available for U.S. customers.

The move comes a few days after Gemini revealed plans to establish a new engineering hub in India. The exchange's founders Tyler and Cameron Winklevoss recently announced "big plans for international growth this year in APAC.” Earlier this month, Gemini filed a pre-registration with the Ontario Securities Commission to become a restricted dealer in Canada.

Gemini has been scrutinized by U.S. authorities. New York State’s Department of Financial Services is reportedly investigating the exchange over claims that many users believed assets in their Earn accounts had been protected by the Federal Deposit Insurance Corporation.

Gemini's Earn program halted withdrawals in November, after its operating partner, Genesis, cited “unprecedented market turmoil.” In January, the firm filed for Chapter 11 bankruptcy. Reports at the time suggested that up to $900 million in Earn user funds could have been locked. The U.S. Securities and Exchange Commission also charged the exchange with offering unregistered securities through Earn in January.

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips

CFTC chair says Binance intentionally broke rules concerning futures, commodities

April 14, 2023 Coin Telegraph

Binance

The head of the CFTC, Rostin Behnam, recently spoke out against Binance and its leadership at a public-facing event held at Princeton University.

Rostin Behnam, Chairman of the Commodity Futures Trading Commission (CFTC), recently spoke out about the allegations levied against Binance, claiming that the beleaguered cryptocurrency exchange’s leadership knowingly operated outside of U.S. laws governing the exchange of commodities and futures.

Speaking at a fireside chat that took place at the DeCenter Spring Conference at Princeton University on April 14, Bloomberg reports that Behnam told those in attendance that Binance leaders had intentionally flouted the rules concerning operations, including knowingly allowing U.S. citizens to participate on the exchange through the use of virtual private networks (VPNs) and other obfuscation tools.

@Princeton DeCenter Spring Conference kicks off with CFTC chair Rostin Behnam on crypto as commodity, and now a panel on what widespread adoption would mean for regulation and governance. pic.twitter.com/pkHhOWuScj
— Andrew Chignell (@AndrewChignell) April 13, 2023

“These are not unsophisticated individuals,” Behnam said at the event. “They are starting large companies and offering futures contracts and derivatives to U.S. customers.” The CFTC head later added “If you are going to offer futures contracts in the U.S., there is a clear understanding that you are registered with the CFTC and comply by the law.”

The comments stem from the CFTC’s lawsuit against Binance and its CEO Changpeng “CZ” Zhao for alleged trading violations. Per a report from Cointelegraph, “The CFTC is pressing seven counts for executing unregistered futures transactions, providing illegal commodities options, failure to register as a Futures Commission Merchant, Designated Contract Market or Swap Execution Facility, failure to supervise diligently or implement AML/KYC measures and law evasion.”

The nuts and bolts of the CFTC’s suit against Binance — the exchange also faces legal action from the IRS and federal prosecutors — relies on supposed evidence that Binance and CZ continued onboarding U.S. customers despite a policy prohibiting such actions and that the company knowingly engaged in illegal futures trading, allegedly running the business afoul of U.S. anti-money-laundering laws.

As #Binance has grown as a company, we've continued to increase our investment of resources towards compliance.

Watch the video below to discover more about our dedicated team and the growth of our compliance efforts.
— Binance (@binance) April 11, 2023

It’s unclear at this time why the CFTC head would participate in what appears to be flippant public discussion of ongoing investigations. Binance, for its part, continues to assert its participation in good-faith efforts at global compliance.

When levees break, liquidity flows — Analyzing Ethereum Shapella and liquidity staking derivatives

April 12, 2023 Coin Telegraph

Coin Telegraph

Volumes from the top five Ethereum staking platforms suggest holders are hedging against the unknown until after ETH withdrawals are enabled.

The Ethereum network’s planned Shanghai hard fork is nearly here. Planned for April 12, this is the first major upgrade since The Merge in September 2022. The “Shapella” upgrade (a combination of the two major proposals Shanghai and Capella), includes EIP-4895 which enables validators to withdraw staked ETH from the Beacon chain (Consensus layer) to the EVM (execution layer). The execution layer is the fun and friendly Ethereum users have come to know and love.

Why is this a big deal? With just over 18 million ETH currently staked (valued at just over $33 billion at the time of writing), some of which has been locked up for years, the possibility of these tokens flooding an already teetering market is enough to get some holders ready to sell the news once withdrawals are enabled.

For holders who are both long and short ETH post-withdrawals, it’s likely to be a significant event, and on-chain activity suggests many feel the same: activity around liquid staking derivatives (LSDs) can be a useful gauge for what the market might do post-unlock.

Liquid Staking Derivatives could exert influence over Beacon Chain unlocks

What are liquid staking derivatives? They are a relatively new financial instrument born of DeFi that function like bearer instruments for staked ETH. Similar to how borrowing and lending protocols give users a share token to represent locked collateral (think Aave’s a-tokens), staking ETH generates a wrapped asset used to claim the equivalent amount of Ethereum from the staking platform. When a staker deposits ETH with major platforms like Lido, Rocketpool, Frax, Stakewise and now Coinbase, they receive a platform-specific flavor of LSD. Because staked tokens are illiquid, these wrapped assets allow stakers to continue earning rewards while securing the network without completely giving up the opportunity to participate in other activities within DeFi.

Liquid staking derivatives aim to solve these problems by allowing staked assets to be traded on secondary markets. This means that stakers could access the value of their staked ETH before the Shanghai upgrade enables withdrawals or, in the future, while maintaining their staked position. For example, a staker could use their wrapped ETH as collateral on another platform, or cover an unexpected expense by selling their LSD on a secondary market.

RocketPool, Lido, Coinbase and Frax

Though the markets have seen what seems to be an increasing string of green days, with Ethereum rapidly catching up to Bitcoin’s year-to-date performance, ETH's gains are set against a backdrop of volatility among LSDs and staking tokens.

Lido’s LDO hasn’t recaptured its high from early March and has maintained a resistance at $2.75. The largest staking protocol by nearly an order of magnitude, Lido currently offers some of the highest staking rewards among major providers with an average APY around 10%. The high rewards are no surprise: Lido took in nearly 50 million ETH in fees and 5 million in revenue in March, with April on track to meet or exceed those numbers.

*LDO versus ETH price. Source:* *TradingView*

RocketPool’s RPL fared much better with a 25% increase over the last thirty days. The wrapped asset issued by the number three staking provider by TVL, rETH, has historically traded at a premium to ETH and other LSDs, likely a result of the provider’s reputation as the most decentralized staking solution available to holders today, making rETH a desirable LSD to hold.

Over the last thirty days, RocketPool has seen over $46 million in inflows, with many likely hoping to cash in on rETH’s premium when withdrawals are enabled. RocketPool’s average APY according to DeFi Llama is around 3.65% which isn’t as high as other providers, but with over 1,800 active RocketPool nodes, the decentralized nature of the protocol is attractive. Addresses holding RPL have been steadily increasing as well.

Conversely, LSDs from the two top staking providers, Lido and Coinbase both trade at a discount to spot ETH. Together representing nearly 90% of all staked ETH, it’s unsurprising that Lido and Coinbase have both come under scrutiny as centralizing entities given their concentration of staked ETH.

*Ethereum LSD providers share of staked ETH. Source:* *DeFi Llama*

Despite RPL’s impressive performance and StakeWise’s native token SWISE’s 15% gain, Frax seems to have come out the winner.

Frax Ether has seen the most significant jump in total value locked over the last 30 days compared to the other top ten staking providers at 14% growth for a $244 million valuation. Despite the increase in TVL, Frax totaled only $3.1 million in inflow over thirty days, putting the protocol just above StakeWise’s $2.6 million.

*Total value locked in Frax. Source:* *DeFi Llama*

Liquid staking derivatives like the wrapped Ether offered by staking providers is an important part of the Ethereum ecosystem much like plasma is an essential part of human blood. DeFi, NFT trading and GameFi are all interlinked, sometimes more subtly than others.

LSDs perform an important function of maintaining liquidity within the Ethereum ecosystem. Currently, over 15% of all Ether that exists is staked with a Beacon chain validator (meaning this doesn’t include any ETH being used as collateral on borrowing/lending platforms).

Considering that a non-trivial amount of that ETH has been locked for years, through one of the toughest bear markets on top of that, indefinitely freezing this much capital (worth over $33 billion at the time of writing) would have a lasting and noticeable effect on the entire ecosystem.

Over the last 30 days though, trying to hedge against the chaos post-Shapella by holding unstaked ETH didn’t perform much better than holding an LSD: ETH is up 31% compared to stETH’s 30%, rETH’s 30%, while Coinbase’s cbETH is up 32% and Frax’s LSD is up 34%.

Overall, liquid staking derivatives are an important development in the staking ecosystem, as they help to address some of the challenges associated with staking, while also expanding the pool of potential participants in the ecosystem.

Withdrawals being enabled for staked Ethereum on the Beacon chain means that proof-of-stake Ethereum has reached a point of sufficient stability and security, and the stakers who participated in securing the network will be able to retrieve their staked funds.

Regardless of the immediate impact of enabled withdrawals, proof-of-stake Ethereum’s continued success relies on incentivizing ETH holders to validate the network, and liquid staking derivatives have proven to be an effective mechanism to do so.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Ethereum price metrics hint that ETH might not sell-off after the Shapella hardfork

April 12, 2023 Coin Telegraph

Coin Telegraph

ETH traders are exercising caution ahead of the April 12 Shapella hardfork, but the signal to watch is staking unlock requests.

Ether (ETH) price has increased by 58% year to date, but it has far underperformed the market leader Bitcoin (BTC). In fact, the ETH/BTC price ratio has dropped to 0.063, its lowest level in 9 months.

Analysts believe that the majority of the movement can be attributed to the Ethereum network's upcoming Shapella hard fork, which is scheduled for April 12 at 10:27 p.m. UTC.

*Ether / Bitcoin price ratio at Binance. Source: TradingView*

The Ethereum network upgrade will allow stakers to unlock their Ether rewards or stop staking entirely. By April 11, over 170,000 ETH withdrawals were requested, according to the analytics firm Glassnode. However, the total staked on the Beacon Chain exceeds 18.1 million ETH, which has traders fearful until more information on ETH’s potential selling pressure becomes available.

Is the price impact of the Shapella fork already priced in?

The staking unlock was widely known and expected, so traders could have anticipated the movement. Some analysts have gone so far as to call the hard fork a "buy the news" event.

Literally everyone: “Ethereum Shanghai is a buy the news event because everyone thinks it is a sell the news event” pic.twitter.com/TpyL1TDnPj
— HORSE (@CanteringClark) April 9, 2023

Using a meme, trader @CanteringClark is likely expressing dissatisfaction with the theory, but to invalidate the hypothesis, one must investigate potential reasons for ETH’s underperformance other than the much anticipated hard fork.

For starters, the Ethereum network's average transaction fee has been above $5 for the past five weeks and the Shapella fork does not address the issue, despite minor improvements. This alone lowers the chances of a bullish breakout following the upgrade, as most decentralized applications (Dapps) and projects will continue to prefer second layer and competing networks.

Furthermore, volume at Ethereum-based decentralized exchanges (DEX) have fallen by 84% since a weekly peak of $38.2 billion on March 5. The most recent data for the week ending April 2 was $6.4 billion, according to DeFiLlama. In the same period, competing blockchains saw 60% lower volumes on average, a sign that Ethereum lost market share.

According to Paul Brody, EY's global blockchain leader, one reason for Ether's price underperformance relative to Bitcoin could be "the battle to keep Ethereum sufficiently and properly decentralized." Brody cites exchanges as highly centralized custodial validators, as well as some semi-centralized players and staking pool operations that invest funds from tens of thousands of individual crypto wallets.

Ether derivatives display balanced bets between bulls and bears

Let's examine Ether derivatives metrics to determine the current market position of professional traders. For example, the open interest in Ether options for the weekly expiry on April 14 is $510 million, with neutral-to-bullish call instruments outnumbering protective put options by 36%.

Those ETH options bulls could come up empty-handed because 60% of their bets were placed at $2,000 or higher. As a result, if Ether's price remains between $1,800 and $1,900 on April 14 at 8:00 a.m. UTC, the outcome is balanced between call and put options. Furthermore, an expiry price between $1,900 and $2,000 represents a mere $100 million advantage for bulls, which is unlikely to justify the cost of a price pump.

Futures markets should also be examined to determine whether the Shapella hard fork has caused investors to become more risk-averse. Ether quarterly futures are popular among whales and arbitrage desks, and they typically trade at a slight premium to spot markets, indicating that sellers are requesting more money to postpone settlement.

As a result, futures contracts in healthy markets should trade at a 5% to 10% annualized premium — a situation known as contango, which is not unique to crypto markets.

*Ether 3-month futures annualized premium. Source: Laevitas.ch*

The premium on Ether futures is currently 2%, down from 4% the previous week. Despite being below the 5% neutral threshold, it shows no excessive short demand.

Traders should monitor staking unlock requests

Based on Ether derivatives, there is no reason to believe professional traders expect a significant price correction as a result of the staking unlock. Nonetheless, given the high transaction fees and declining DEX activity, the chances of a "buy the news" event are slim.

Professional traders would have used derivatives instruments to bet against Ether's price because the event was widely publicized, which hasn't happened given the ETH futures' premium. There are no obvious reasons for a rally, but derivatives traders do not anticipate any panic selling. So, unless the number of staking unlock requests significantly increases, Ether should remain near $1,900 for the foreseeable future.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bitget launches $100M Web3 fund for crypto projects in Asia

April 10, 2023 Coin Telegraph

Asia

Bitget's new fund will receive $100 million as an initial investment to support the next generation of Web3 projects.

Crypto derivatives exchange Bitget launched a new fund focused on supporting the next generation of Web3 projects. According to a statement seen by Cointelegraph, $100 million will be invested in the fund as an initial investment.

Bitget says it will target funding Web3-friendly venture firms and projects worldwide. It will focus on Asian projects from experienced teams with clear roadmaps that are working on real-world problems.

“We can see that Web3 space is evolving rapidly and many projects deserve the support to further advance such development and make Web3 a truly global phenomenon, as Web2 had once become. That is why the Bitget Web3 Fund will strive to seek out projects that have the most impact on this process,” said Gracy Chen, managing director of Bitget.

According to the exchange, potential partners in the initiative include several venture capitalists such as Foresight Ventures, ABCDE Capital, SevenX Ventures and DAO Maker, as well as Dragonfly Capital — which recently announced a $10 million investment on Bitget to support its ongoing global expansion.

Bitget revealed that since launching in 2018, it has attracted over 80,000 traders and 380,000 copy traders. The exchange plans to expand spot trading, the launchpad and Bitget Earn products in 2023. Bitget recently acquired the BitKeep wallet — a Web3 access gateway with over 9.5 million users — for $30 million.

During last year’s bear market, the exchange also launched a $200 million fund to safeguard users’ assets and restore investors’ confidence. Bitget pledged to secure the fund’s value for three years. In addition, the exchange claims to have implemented strict Know Your Customer (KYC) and Anti-Money Laundering (AML) policies last year to keep bad actors out of its services.

Magazine: Hodler’s Digest, April 2-8: BTC white paper hidden on macOS, Binance loses AUS license and DOGE news

Binance Australia Derivatives license canceled by securities regulator

April 6, 2023 Coin Telegraph

Australia

In February, Binance Australia Derivatives abruptly closed certain derivatives positions and accounts, citing investor classification compliance.

The Australian Securities and Investments Commission (ASIC) has canceled the license of Binance Australia Derivatives after a targeted review of Binance’s operations in the country.

“ASIC has today canceled the Australian financial services license held by Oztures Trading Pty Ltd trading as Binance Australia Derivatives,” the securities regulator stated in the official announcement on April 6.

Following the license cancellation, Binance Australia Derivatives clients will not be able to increase derivatives positions or open new positions with the platform from April 14. The company will also require users to close any existing derivatives positions before April 21, as Binance is expected to close any remaining open positions on that day.

“The terms of the cancellation include a provision that the cancellation has no effect on the requirement for Binance to continue as a member of the Australian Financial Complaints Authority until the end of April 8, 2024,” the statement said.

The Australian securities regulator went on to say that it has been conducting a targeted review of Binance’s financial services business in Australia, including its classification of retail and wholesale clients. According to ASIC chair Joe Longo, the review was related to compliance with the classification of retail and wholesale clients. The official said:

“Retail clients trading in crypto derivatives are afforded important rights and consumer protections under financial services laws in Australia, including access to external dispute resolution through the Australian Financial Complaints Authority.”

In the statement, ASIC mentioned that the global Binance exchange and its CEO, Changpeng “CZ” Zhao, are currently facing a lawsuit from the United States Commodity Futures Trading Commission. The regulator also noted that various Binance group entities had been subject to other regulatory warnings and action worldwide, referring to a series of warnings and investigations initiated by global regulators against Binance in 2021.

Following recent engagement with ASIC, Binance has chosen to pursue a “more focused approach” in Australia by closing down Binance Australia Derivatives, a spokesperson for Binance told Cointelegraph. The representative emphasized that spot trading on Binance will still be available for Australian residents, stating:

“Australians can continue to enjoy the use of our spot exchange product. There are a small number of remaining users on Binance Australia Derivatives, approximately 100, and we have reached out to notify them of the winding down process.”

The news comes after Binance Australia Derivatives sent abrupt notifications to its users in late February, saying it was starting to close certain derivatives positions and accounts. The firm cited investor classification compliance, reportedly claiming that it was restricting users that didn’t meet the requirements to be wholesale investors. Local regulators subsequently launched an investigation, aiming to conduct a “targeted review” of Binance’s local derivatives operations.

Magazine: Asia Express: US and China try to crush Binance, SBF’s $40M bribe claim

Binance’s market share drops on CFTC suit and no-fee trading halt: Report

April 4, 2023 Coin Telegraph

Binance.us

Binance’s market dominance fell largely due to its decision to end zero-fee trading for some trading pairs and not the CFTCs lawsuit, says Kaiko.

The dominance of cryptocurrency exchange Binance in trading volume market share has slipped over the past two weeks following a lawsuit from the United States commodities regulator and its decision to halt some zero-fee trading.

In an April 4 newsletter blockchain analytics platform Kaiko reported Binance “lost 16% market share of trade volume,” with its market share at 54% as of the end of Q1.

The U.S. Commodity Futures Trading Commission (CFTC) sued Binance on March 27 alleging it flouted regulatory compliance through violations of derivatives laws by offering trading to U.S. customers without registering.

Kaiko said Binance still takes in more volume than the rest of its combined competitors but its March 15 decision to end zero-fee spot and margin trading for 13 trading pairs including BNB (BNB), Bitcoin (BTC) and Ether (ETH) trading pairs with multiple fiat currencies and stablecoins largely contributed to the firm’s downfall.

“Overall, Binance’s excess volume largely vanished with the end of zero-fee trading, which was reflected in an even dispersal in market share among the remaining exchanges,” Kaiko reported.

*Binance’s market share trading volume amongst the top centralized exchanges fell to 54% by the end of the first quarter. Source:* *Kaiko*

Kaiko explained part of this fall was alleviated by its U.S. arm, Binance.US, which managed to triple its market share over the quarter from 8% to 24%.

Binance didn’t fall excessively in every domain though, the exchange managed to maintain its derivatives dominance, only giving up 2% market share over the last quarter.

Kaiko explained that the fall in trading volume figures was influenced mostly by the end of zero-fee spot trading as opposed to the CFTC lawsuit:

“The trend is quite different when looking at derivatives volumes: Binance only lost about 2% of market share for perpetual futures trade volume. This suggests that the majority of market share was lost purely due to the end of zero-fee spot trading, rather than trepidations around a lawsuit.”

The market share fall to 54% comes as Binance was one of the “big winners” of the FTX fiasco which saw its market share in trading volume rise to 65% during the last quarter of 2022:

“Binance’s market share increased from 50% to 65% after November 2022, while OKX saw its market share increase from under 10% to 17%. Bybit and the three smaller exchanges Huobi, Bitmex and Deribit, on the other hand, saw their market share decline.”

Over the last quarter, Upbit was the only crypto exchange to reclaim a “significant share” in trading volume of the 17 trading platforms that Kaiko analyzed.

In light of recent regulatory pressures, the banking crises and the catastrophic collapse of FTX, many reports have observed a growing trend towards decentralized alternatives and self-custody wallets.

Bitcoin and Ether left centralized exchanges in record numbers following the fall of FTX. The daily trading volume of decentralized perpetual exchanges also reached $5 billion in November 2022, the most since Terra Luna Classic (LUNC) and its connected TerraClassicUSD (USTC) stablecoin collapsed in May 2022.

Trading volumes on the decentralized exchange Uniswap are now rivaling that of crypto exchanges Coinbase and OKX but is still only a fraction of the size processed by Binance.

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