A Crypto Exchange Is Buying Back $24 Million-Worth of Its Own Tokens
FCoin, a new cryptocurrency exchange that saw spiking trading volume recently due to its controversial revenue model, has revealed a plan to buy back millions of its own tokens to provide capital for a new fund of funds.
The exchange announced last Friday that the new fund will be backing a group of selected token funds to further invest in blockchain and cryptocurrency projects. The funds selected will all be accredited sponsors, it added.
During an initial phase, it will allocate 100 million of its own FT tokens – worth around $24 million at press time – to fund the project. However, instead of providing the amount from its own reserves, FCoin said the the capital will come from a buyback of tokens on the secondary market.
The move accompanies FCoin’s addition of a new “FT trading zone,” also announced on Friday, which includes trading pairs between FT and other tokens.
FCoin stated that only projects that have raised over 3 million FT through the fund of funds and have been recommended by at least two sponsors will be eligible for listing in the new trading section.
As previously reported by CoinDesk, FCoin saw soaring trading volumes after launch due to the adoption of a new business model called “trans-fee mining,” which reimburses users’ transaction fees with the exchange’s FT tokens.
While the model has drawn industry criticism over its long-term sustainability, CoinMarketCap data shows the platform recorded some $3.8 billion in trading volume over the last 24 hours.
That said, FCoin’s plan to buy back its tokens from the secondary market also follows a continuous decline in the price of the FT token, which has plunged by around 80 percent over a month, from $1.25 on June 13 to around $0.24 at press time.
Coins image via Shutterstock
Written by CoinDesk.com
G20 Watchdog Unveils Framework to Monitor Crypto
G20’s Crypto Monitoring Framework
The Financial Stability Board (FSB) announced Monday that it “has developed a framework and identified metrics to monitor the financial stability implications of crypto-assets markets.” The framework was developed in collaboration with the Committee on Payments and Market Infrastructures (CPMI).
The board also published and submitted a report detailing its work on crypto-assets to the G20 as requested by finance ministers and central bankers at the G20 meeting on March 19 and 20 in Buenos Aires.
The FSB is an international body that monitors and makes recommendations about the global financial system to G20, an international forum for governments and central bank governors. The CPMI supports financial stability by promoting the safety and efficiency of payment, clearing, settlement and related arrangements.
“The objective of the framework is to identify any emerging financial stability concerns in a timely manner,” the report states, adding:
The framework discusses the primary risks within crypto-assets and potential transmission channels to financial stability risks. The framework identifies which metrics the FSB might usefully monitor in the short-to-medium term.
The report also notes that “in general, monitoring the size and rate of growth of crypto-asset markets is critical to understanding the potential size of wealth effects, should a decline in valuations occur.” Furthermore, “the use of crypto-assets for payment or settlement is another transmission channel to be monitored.”
FSB’s Proposed Metrics
Citing that the crypto market and its public data sources, which the proposed monitoring metrics are based on, are “rapidly evolving,” the FSB warned that “the quality of the underlying data can vary, and might not always be satisfactory.” The report explains:
Market-related figures, such as metrics on prices, trading volumes, and volatility may be manipulated by generally prohibited practices such as ‘wash trading,’ ‘spoofing,’ and ‘pump and dump,’ the existence of which cannot be ruled out at this stage.
The FSB also pointed out that “the proposed metrics may not fit all types of crypto-assets equally.” Nonetheless, it believes that they “provide a useful picture of crypto-asset markets and the financial stability risks they may present.” Over time, the FSB and the CPMI will consider improvements to the metrics as well as add new ones at a later stage.
No Material Risk to Financial Stability
The FSB report refers to decentralized, unbacked cryptocurrencies and crypto-assets as “first generation private digital tokens,” which are dismissed as “unsafe money.” However, it notes that “safer central bank issued cash may be less convenient in an era of electronic payments.” The report continues:
Crypto-assets do not pose a material risk to global financial stability at this time…At present, like crypto-assets in general, crypto-asset platforms do not pose global financial stability risks. Nevertheless, they raise other significant concerns, including consumer and investor protection, market integrity and money laundering/terrorism financing, among others.
The FSB further revealed that the Basel Committee on Banking Supervision is currently “conducting an initial stocktake on the materiality of banks’ direct and indirect exposures to crypto-assets.”
While the FSB does not believe crypto-assets pose a material risk to global financial stability, it supports “vigilant monitoring in light of the speed of developments and data gaps,” the report details.
Written by CoinDesk.com
Institutional money is growing the crypto space, says Coinbase vice president
Institutional investments in cryptocurrency are helping to grow the industry, Coinbase Vice President and General Manager Adam White told CNBC.
“What’s so unique about cryptocurrencies, and in many ways this asset class, [is that it] was driven by retail investors — not institutions,” White said on “Fast Money” Monday.
So it was surprising that his firm, a San Francisco-based digital currency exchange, has had “unprecedented” interest from institutional investors throughout 2017, he said.
The “institutional conversations have become more and more profound,” White said. In response, his firm has opened a New Yorkoffice and launched new products and services.
Last Friday, Coinbase, which is also the largest cryptocurrency exchange in the U.S., announced it was considering adding five coins to its platform, including cardano, basic attention token, stellar lumens, Zcash and 0x. All five assets moved higher after the announcement.
“The idea of adding new assets is very simply: our customers want it,” White said.
But so far, none of the coins have been approved, and it’s not yet been determined if they are securities. The company said in a blog post on Friday that some of the assets may have limited functions, and may only be available in some countries.
The firm has previously been cautious about the addition of new tokens despite user demand, as the cryptocurrency universe endured increased regulatory scrutiny. Up until now, Coinbase has only listed four coins on its platform.
“We have a long-term vision for the space,” White said. “And we are focused on building the exchange, the wallet, the custodian, that allows capital to move into the space.”
Not everyone is as bullish on digital currency though. Investor and author Kevin O’Leary is bearish on cryptocurrency — especially bitcoin, which was priced around $6,655 Monday at 5:30 p.m. ET.
“But until you know with certainty if you’re an asset allocator and you’re running a sovereign fund or you’re doing a pension plan for some state. You’re not going to put a dime into this stuff,” O’Leary said on “Fast Money” Monday.
In order for cryptocurrency to be a lucrative investment, O’Leary said, investors need to know “it’s transparent; it’s compliant; and the regulators are on board.” “And then you’ll see real money. Right now it’s fringe.”
But White pointed out that those things don’t happen overnight.
“Those are the exact three things Coinbase is working on,” he said. “What we’re seeing though, with institutions, is that they want absolutely the right regulatory structure around it.”
“People are valuing these assets very differently,” White said. “Whether they’re crypto hedge funds or the retail investor. The core metrics that people look at though, are: What are the daily transactions? How much volume’s moving through it? How many people are building on top of it?”
“The end of the day these are open protocols that facilitate the kind of value, creation and movement,” he said.