Australian stock exchange officially abandons blockchain plans: Report

May 19, 2023 Coin Telegraph

Australia

ASX abandons blockchain rebuild to explore conventional options to achieve the desired business outcomes as it sends RFP to potential software vendors.

Australia's stock market operator has decided to abandon its plans of rebuilding its software platform using blockchain technology, marking a significant rejection of the once-celebrated concept that gained prominence through its association with cryptocurrencies.

The Australian Securities Exchange (ASX) caused frustration among market participants in November when it decided to "pause" the rebuild of its comprehensive trading, settlement and clearing software based on decentralized computing. An external review concluded that after seven years of development, significant rework was necessary.

Following the initial pause, the company has indicated that it is exploring alternatives for a new attempt to rebuild its 30-year-old software. However, during a meeting with participants on May 17, it was reported that the company stated it would not incorporate blockchain or any related distributed ledger technology (DLT).

When asked about the approach for the next attempt, Tim Whiteley, the exchange project director, stated during the meeting that while they are exploring all options, they will likely need to use a more conventional technology instead of DLT or blockchain to achieve the desired business outcomes.

The statement indicates the conclusion of a project that was expected to showcase one of the most notable examples of a concept aimed at expediting online transactions through secure processing across multiple locations.

ASX was posed to be the world’s first securities exchange to adopt blockchain technology in the operation of its core services in partnership with the New York-based contractor Digital Asset, who is providing the technology. ASX bought a small stake in Digital Asset after hiring it to rebuild its software in 2016.

During the meeting, Whiteley informed participants that ASX was progressing towards finalizing a new strategy by the end of the year. He mentioned that the company had sent a request for information to potential software vendors and had also issued a request for proposal (RFP) to vendors who expressed a more positive interest, seeking more comprehensive feedback.

ASX received feedback from market participants expressing their preference for a less risky approach, avoiding a sudden transition to new software on a single date. Whiteley acknowledged that this feedback has been considered in the implementation planning process.

Magazine: Australia’s world-leading crypto laws are at the crossroads: The inside story

London Stock Exchange may provide clearing services for BTC derivatives starting in Q4

April 13, 2023 Coin Telegraph

bitcoin futures

LCH SA will team up with the FCA-regulated GFO-X trading venue to create a centrally cleared, regulated trading environment.

The United Kingdom could see its first centrally cleared trading venue for digital asset derivatives due to a partnership between a London Stock Exchange Group (LSEG) business and trading startup Global Futures and Options (GFO-X). They intend to launch the service in the fourth quarter of this year.

According to an April 11 announcement, LCH SA, the Paris-based subsidiary of the LSEG clearinghouse, is set to provide clearing services for dollar-denominated, cash-settled Bitcoin (BTC) index futures and options contracts traded on the GFO-X venue. The plan still requires regulatory approval.

Digital Assets: LCH SA To Offer Clearing Services For Bitcoin F&O Contracts Traded On GFO-X https://t.co/n1bF2ZbZwp
— DailyAlts (@DailyAlts) April 13, 2023

GFO-X is regulated by the United Kingdom's Financial Conduct Authority (FCA) to operate a multilateral trading facility. GFO-X CEO and cofounder Arnab Sen described the company as “The UK’s first regulated and centrally cleared trading venue focused entirely on digital asset futures and options.”

LCH SA has created a new, segregated clearing service called LCH DigitalAssetClear. Frank SoussanM head of LCH DigitalAssetClear, said:

“Bitcoin index futures and options are a rapidly growing asset class, with increasing interest among institutional market participants looking for access within a regulated environment they are familiar with.”

Traditional financial institutions and other major corporations are increasingly moving into digital assets. In January, Samsung launched a Bitcoin exchange-traded fund (ETF) on the Hong Kong Stock Exchange. The Tel Aviv Stock Exchange is seeking to expand its crypto trading. Meanwhile, a Boerse Stuttgart Digital subsidiary recently received approval from German regulators to offer crypto custody service. Nasdaq is expected to launch a crypto custody service in the first half of this year.

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German Stock Exchange Boerse Stuttgart to Provide Crypto Custody Through Licensed Subsidiary

April 2, 2023 Bitcoin.com

Nasdaq Aims to Launch Crypto Custody Services in Second Quarter

March 26, 2023 Bitcoin.com

Owner of Major US Stock Exchange To Launch Crypto Custody Services by June: Report

March 25, 2023 The Daily Hodl

Tel Aviv Stock Exchange’s crypto trading proposal a ‘closed-loop system’

March 8, 2023 Coin Telegraph

Coin Telegraph

Israeli crypto users will soon have a new means of regulated crypto trading, but the local ecosystem is not convinced that this is what the crypto industry needs.

When the Tel Aviv Stock Exchange (TASE), the only public stock exchange in Israel, announced that it drafted a proposal for regulation-friendly crypto trading on Feb. 27, it echoed across the crypto industry as a step forward for crypto adoption. However, some experts have framed the proposal as a somewhat underwhelming update to the current crypto landscape in Israel.

In short, the TASE proposes that only authorized brokerages act as fiat-to-crypto onramps, aided by licensed crypto trading providers. The stock exchange said that it designed the framework to mitigate risks and enhance consumer protection. Without a specific timeframe, the proposal will be sent for approval by the TASE board of directors once the public comments have been submitted.

How TASE plans to conduct crypto trading

Non-banking members (NBM) of the Tel Aviv Stock Exchange will play a vital role in the proposed crypto trading services. An NBM is an Israeli broker authorized by TASE. The official roster shows six brokerage firms with a TASE membership, including UBS Securities Israel, Meitav Trade and Fair Financial Technologies. If the proposal passes the board, these brokers will get in touch with two functions, a licensed crypto trading services provider and a licensed crypto custodian, in order to enable customers to deposit and withdraw fiat money to use for crypto investments.

When a customer wants to trade with crypto, they will need to start by depositing fiat money, Israeli shekels or a foreign currency, to their brokerage account. The broker will then deposit the same amount (still in fiat) in an omnibus account at the licensed crypto trading provider, or crypto exchange.

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As soon as the customer places the order to buy cryptocurrency, the actual purchase will be executed at the crypto exchange via the omnibus account. It will also be recorded in the customer’s brokerage account. Conversely, when a sell order is initiated, the crypto trading platform will sell the coins and send the sum to the same omnibus account as fiat money. From there, the same amount will be deposited back into the customer account at the brokerage.

One step forward

The stock exchange sees a regulatory framework for crypto trading as a means to upgrading the Israeli capital market in line with international standards, according to the announcement, which reads:

“TASE believes that the alignment of local regulation with international regulation will attract more foreign investments and foreign investments and foreign investors into the Israeli market, while at the same time will enable the Israeli public to invest locally, through supervised institutions.”

Ben Samocha, the CEO and co-founder of educational crypto platform CryptoJungle, referred to enabling crypto trading for authorized brokers as another milestone for crypto adoption in Israel. According to him, TASE’s proposal shows the crypto industry’s reputation is back on track after scandals surrounding FTX and Celsius damaged its credibility and trust.

*Display in the lobby of the Tel Aviv Stock Exchange. Source: Twitter*

“Leading brokers such as Excellence and Meitav Trade are providing services for hundreds of thousands of Israelis,” Samocha said, adding that there have been many requests of them to offer crypto services, “especially in the last two years.”

While the nature of the TASE solution will make cryptocurrency more accessible as an investment vehicle, Samocha stressed that it’s not the best solution for the end user:

“Users will only be able to deposit and withdraw fiat, not crypto. The crypto itself will be held in custody by a third party. While it's a step towards the right direction, we still have a long way to go.”

Mark Smargon, the founder and CEO of blockchain-based payment platform Fuse, agreed that the proposal is “not improving anything for the clients themselves.” Since the proposal only includes authorized brokerages that are members of the Tel Aviv Stock Exchange, Smargon believes that it won't have much impact on non-public firms or banks.

Two steps back

Delving into technical details of the proposal, Smargon pointed out that it’s mainly for purchasing crypto “within a closed-loop system.” The idea of self custody goes out of the window with the TASE proposal, and users would need to invest in crypto via a select number of brokers and custodians. “That misses the point of the technological advantage of blockchain and only lets users speculate on asset prices,” he added.

Smargon highlighted the underwhelming impact the proposal would potentially have on the local crypto ecosystem, as “just a handful of licenses were issued while general bank acceptance is low.” He said:

“If the objective is to create clarity with listed companies that wish to provide crypto trading for their clients by giving a handful of centralized, authorized entities the rights to all the brokering and custody, then that sounds like one step forward and two steps backward.”

Aside from drafting a crypto trading framework that prioritizes tighter control for investor protection, the TASE is also working on advancing blockchain adoption within the country’s finance ecosystem. Together with the Israeli Ministry of Finance, digital assets custody provider Fireblocks and the United States-based tech provider VMware, TASE plans to pilot a blockchain-backed platform for trading digital bonds.

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Expected to be finished by the end of March, the pilot will see participating banks receiving a new series of tokenized government bonds in their e-wallets via the newly developed platform, transferring the money held in digital currencies to the Israeli government’s digital wallet.

Shira Greenberg, the chief economist at the Israeli Ministry of Finance, published a detailed report titled “Regulation of the Digital Assets Sector — Roadmap to a Policy” that focuses on the rise of digital currencies and how policymakers can tackle the legal aspect of crypto. Greenberg recommended strict licensing requirements for trading providers and issuers of cryptocurrencies to keep investors protected.

Tel Aviv Stock Exchange moves toward offering crypto trading

March 1, 2023 Coin Telegraph

Coin Telegraph

Israel's sole public stock exchange wants to allow its clients to trade crypto but is facing regulatory resistance.

A draft for the approval of an expansion of crypto trading activities to non-banking members has been published by the Tel Aviv Stock Exchange (TASE) for public comments.

In a TASE first, a Feb. 27 announcement stated the proposed structure will enable customers to deposit fiat money designated for investments in digital assets.

Non-banking members will act as licensed providers for crypto trading and custodial services should the proposal be approved. Customer funds will be placed in an “omnibus account” as the intermediary for crypto trading activities.

It will also allow clients to withdraw funds originating from the sale of crypto but the process is somewhat convoluted. This has been done to mitigate risks and enhance consumer protection, according to the announcement.

“This is another step in the advancement and development of the Israeli capital market that aims to encourage innovation and competition while mitigating the risks and protecting the customers.”

Once comments have been submitted, the proposal will be sent for approval by the TASE Board of Directors, however, no timeframe was provided.

*The lobby of the TASE building, located in central Tel Aviv. It is Israeli's only public stock exchange. Source: Yaniv Morozovsky*

Things may not go so smoothly for the Tel Aviv Stock Exchange and its crypto trading ambitions, however.

The regulatory outlook in Israel is becoming harsh for the sector as a proposed law plans to classify crypto assets as securities. In January, the Israeli Securities Authority (ISA) proposed a framework for regulating digital assets, placing them under the umbrella of securities.

In February, the CEO of Israeli crypto trading and custody firm Altshuler Shaham Horizon, Ilan Sterk, told Cointelegraph that the reclassification is “changing everything here,” and added, “it will kill the industry.”

The TASE announcement stated the current regulatory approach in Israel is to “impose regulation on financial activities or services in digital assets similarly to that currently applied to non-digital assets.”

However, the TASE remained confident, concluding:

“TASE believes that the alignment of local regulation with international regulation will attract more foreign investments and foreign investors into the Israeli market.”

In September, Israeli crypto exchange Bits of Gold became the first in the country to receive a license from the Capital Markets Authority.

Tel Aviv Stock Exchange Takes Steps to Allow Crypto Trading

February 28, 2023 Bitcoin.com

Overstock-funded tZERO Crypto exchange will shut down March 6

February 3, 2023 Coin Telegraph

Coin Telegraph

Once a highly touted exchange, tZERO facilitates securities offerings, some of which are blockchain tokens.

The tZERO Crypto exchange, whose majority owner is Overstock, will shut down on March 6, the company announced via Twitter on Feb. 3. The company says that it will continue to focus on its regulated securities products after the shutdown, as the United States Securities and Exchange Commission (SEC) and other regulators clarify the legal status of crypto assets.

Today, tZERO Crypto informed its customers that it will be ceasing operations on March 6, following an orderly withdrawal of assets by the customers, which continue to be held by the custodian. 1/7
— tZERO (@tZERO) February 3, 2023

tZERO is a financial technology company headquartered in New York. It facilitates securities offerings for private companies that want to go public. In the crypto community, tZERO is most well known for its offering of tokenized shares or “digital securities,” which can potentially be traded on a blockchain.

Online retailer Overstock owns approximately 55% of tZERO, according to the company's Aug. 26 press release.

In 2019, tZERO released a traditional crypto exchange called “tZERO Crypto” that allowed users to buy, sell, and hold Bitcoin (BTC), Ether (ETH), Litecoin (LTC), and other cryptocurrencies. But, in this recent announcement on Feb. 3, the company confirmed it would wind down this exchange on March 6.

In the announcement, tZERO implied that unregulated crypto exchanges are on their way into obsolescence, stating: “We believe that many digital assets would be treated as securities and trade in a regulated ecosystem.” The announcement explained further:

“While the regulatory environment around crypto assets is clarified by the SEC and other regulators (including in view of recent events), we will continue to focus on our unique regulated securities business, which we believe will be the venue where most digital asset securities will trade.”

The company said that the shutdown was set for March 6 to allow for an “orderly withdrawal of assets by the customers, which continue to be held by the custodian.” It did not clarify whether security tokens being traded on the tZERO ATS stock exchange will also be affected by the shutdown of tZERO Crypto. Cointelegraph reached out to tZERO ATS to clarify this point but could not get a response by the time of publication.

21Shares debuts crypto staking ETP on BX Swiss exchange

January 18, 2023 Coin Telegraph

Coin Telegraph

Arthur Krause, director of ETP product at 21.co, the parent company of 21Shares, emphasized that the Staking Basket ETP does not engage in lending.

Switzerland-based cryptocurrency firm 21Shares is betting on proof-of-stake (PoS) coins by launching a new crypto exchange-traded product (ETP) dedicated to staking.

21Shares on Jan. 18 launched the 21Shares Staking Basket Index ETP, a crypto staking index designed to track up to 10 PoS cryptocurrencies. The ETP immediately starts trading on the local stock exchange BX Swiss under the ticker STAKE.

At launch, 21Shares’ STAKE ETP tracks six digital assets, including Binance Coin (BNB), Cardano (ADA), Cosmos (ATOM), Polkadot (DOT), Solana (SOL) and Tezos (XTZ). The index will rebalance on a semi-annual basis in March and September in accordance with market shifts.

With addition of STAKE, 21Shares and its parent firm 21.co now provide a total of 47 crypto ETP products across 12 exchanges in nine countries. The ETPs aim to provide investors with a safe and secure way to gain exposure to crypto, offering an alternative to direct crypto investment.

“STAKE provides value for investors by using the ETP’s assets to generate a passive yield that may offer additional returns by contributing to the network’s security,” 21.co director of ETP Arthur Krause said in a statement to Cointelegraph.

The launch of STAKE ETP comes a few years after 21Shares started experimenting with staking ETPs. In 2019, 21Shares debuted the 21Shares Tezos Staking ETP (AXTZ) and then launched the 21Shares Solana Staking ETP (ASOL) in June 2021.

Both products experienced a significant decline in 2022, which came in line with a massive bear market in crypto last year. On the other hand, the ETPs have been growing so far in 2023 with year-to-date performance surging 38% for AXTZ, and 78% for ASOL.

Krause emphasized that assets like Solana — which is widely linked to the collapsed FTX exchange — have not had any impact on 21Shares’ products, stating:

“Solana — like virtually all other crypto assets — experienced significant price declines in 2022 but suffered no fundamental impairment that would preclude its inclusion in the index."

The STAKE's launch comes after some major global regulators expressed concerns about cryptocurrency staking. In September, the United States’ Securities and Exchange Commission chairman Gary Gensler argued that crypto staking looks “very similar” to lending, referring to massive failures in the crypto lending industry amid the bear market of 2022. Thailand's Securities and Exchange Commission also banned crypto firms from offering staking and lending services in September.

“To be clear, the 21Shares Staking Basket ETP does not engage in any lending whatsoever,” Krause emphasized. He added that staking is a crypto-native strategy allowing investors to pledge assets to support the process of validating blockchain transactions, while lending is a traditional financial strategy where lenders are compensated for the risk that assets they lend may not be returned.

stock exchange

How TASE plans to conduct crypto trading

One step forward

Two steps back

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