UK

UK asset manager M&G invests $20M in Bitcoin derivatives exchange

The investment will open up cryptocurrency derivatives trading to traditional financial institutions.

The investment arm of United Kingdom-based pension fund M&G has invested $20 million in the country’s first regulated Bitcoin (BTC) derivatives exchange, Global Futures & Options Holdings (GFO-X).

An announcement from M&G and GFO-X outlined the investment details, which form part of a $30-million Series B funding round for the derivatives exchange. The platform will initially offer clearing of Bitcoin index futures and options contracts.

The move provides a platform for traditional finance institutions to gain exposure to various cryptocurrency derivative investment products. GFO-X is set to become a Financial Conduct Authority (FCA)-regulated and centrally cleared trading platform for crypto derivatives.

LinksDAO wins bid to buy its first golf course, says CEO

The successful bid comes a month after 88.6% of LinksDAO token holders voted in favor of putting in a “compelling offer” for the golf course in its governance vote.

The decentralized autonomous organization (DAO)-operated golf startup, LinksDAO is primed to become the new owner of the Spey Bay Golf Club in Scotland after successfully winning a bid to buy the course initially listed for just over $900,000.

After winning the bid, the DAO has entered into an exclusivity agreement with the vendor and will look to formally close the deal in early April.

We won the bid.

WE'RE BUYING A GOLF COURSE!!!

— Links (@LinksDAO) March 16, 2023

In the meantime, the DAO is undergoing its “due diligence” phase before it officially puts pen to paper, CEO Jim Daily said in a Twitter Spaces eveon March 16.

While the initial listing was a tick over $900,000, a report from Golf Digest suggested the final sale price is expected to be higher. Links CEO Daily said that they’re not planning on revealing the purchase price until the contract is signed.

LinksDAO put in the highest offer over “several other potential buyers,” the report added.

LinksDAO — self-described as a “global group of golf enthusiasts” that is on a mission to build the “world’s greatest golf community” — put in the bid following a community vote that saw 88.6% of 4,300 LinksDAO members vote in favor of putting in an offer.

If the deal closes, it would be the DAO’s first golf course purchase.

We've entered into an exclusivity agreement to purchase Spey Bay Golf Course on the Moray coast of northern Scotland! Thank you to @GolfDigest for covering the purchase. Read more https://t.co/rAcfrvJsIe

— Links (@LinksDAO) March 16, 2023

The DAO is still “working through the details” of the course membership structure and hasn’t confirmed what benefits would be provided to LinksDAO token holders who wish to access the golf course.

As for the state of the golf course right now, Besvinick described it as “playable.”

“It’s good, it’s going to be getting a lot better soon and we think it’s going to be great by this time or springtime next year.”

If the deal is closed, Besvinick said that the DAO would keep the course open until it starts renovations.

Links is seeking advice from several architects to remodel the golf course, because it has “suffered from weather and erosion issues over recent decades,” head of strategy Adam Besvinick explained in the Twitter Spaces.

“Improved maintenance will elevate this site significantly,” he added.

Daily and Besvinick explained in its community proposal to purchase the course that the high ceiling to low price ratio of the Scottish course made it “too special to ignore.”

“Even a price triple the ‘guide price’ would be cheaper than most mediocre courses we have assessed thus far in the U.S.”

Cointelegraph reached out to Links for comment but did not receive an immediate response.

UK blockchain carbon offset platform raises $45M in seed funding

Carbonplace says it will use the funds to scale its services and become the “SWIFT of carbon markets.”

According to a press release published on Feb. 8, blockchain carbon credit transaction network Carbonplace has secured $45 million in an investment round from its nine founder banks with a combined $9 trillion in assets under management. The banks are BBVA, BNP Paribas, CIBC, Itaú Unibanco, National Australia Bank, NatWest, Standard Chartered, SMBC and UBS. The London-based fintech company has also announced that it will become an independent entity, led by new CEO Scott Eaton.

As told by Carbonplace, the company will use the investment to strengthen its platform and workforce, allowing it to scale its services to a larger client base of financial institutions and seek partnerships with other carbon market players, such as registries and stock exchanges around the world. Carbonplace has been described as the “SWIFT [Society for Worldwide Interbank Financial Telecommunications] of carbon markets” that will allow participants to share carbon data in real-time, ensuring a secure and traceable settlement of transactions.

Commenting on the development, Robert Begbie, CEO of NatWest Markets, cited data from McKinsey showing that “global demand for voluntary carbon credits is likely to increase by a factor of 15 in the next several years.” He said Carbonplace is uniquely positioned to meet that demand by providing scalable technology to environmentally conscious businesses.

While the service is expected to launch later this year, Carbonplace has already piloted trades with companies such as Visa and Climate Impact X. Carbonplace uses its own distributed ledger technology to facilitate offset transactions and has hailed digital wallets as a tool to “enable owners to reliably demonstrate ownership to the market, reducing the risks of double counting and simplifying reporting.”

*Projections of the global carbon offset market. Source: BBVA, BloombergNEF*

FTX collapse calls for ‘prudent regulation’ in the UK

The United Kingdom is taking cautionary lessons from the collapse of FTX as calls for greater regulation come from public and private sector institutions.

The collapse of FTX is being viewed as a cautionary tale and a precursor for more prudent regulation by public and private sector players in the United Kingdom.

Bank of England deputy governor Sir Jon Cunliffe made headlines ahead of the Christmas weekend in an interview with Sky News, outlining his belief that greater protection needs to be afforded to investors in the U.K. looking to gain exposure to cryptocurrency markets.

Cunliffe stressed that prospective cryptocurrency users and investors should have a structure to invest in the asset class that ensures similar consumer protection and integrity to conventional financial markets.

The deputy governor highlighted increased interest in cryptocurrency markets from financial institutions and retail users as a driving force behind the need for greater regulatory oversight in the country:

“We had banks and investment funds and others who wanted to invest in it and I think we should think about regulation before it becomes integrated with the financial system and before it becomes a systemic problem.”

Cunliffe also used the collapse of FTX as an example where existing regulatory parameters guiding the traditional finance sector may have provided protection to users that have been left out of pocket:

“We saw things like clients’ money appears to have gone missing, conflicts of interest between different operations, transparency, audit and accounting.”

Drawing parallels to the gambling sector in the United Kingdom, Cunliffe said that investors should have access to a regulated environment that prevents losing access to funds as was the case in the collapse of FTX.

Cointelegraph reached out to Mitch Mechigian, partner at investment firm Blockchain Coinvestors, for more insight into the current regulatory environment for the cryptocurrency and blockchain ecosystem in the United Kingdom.

Based in London, Mechigian highlighted his view that financial institutions and regulators continue to see value in blockchain technology and digital assets in a post-Brexit British economy:

“British financial institutions and banks — many of whom already are investing heavily in blockchain technology — continue to want to participate in the digitalization of commerce, which starts with digital assets, monies and commodities.”

The collapse of FTX demonstrates the importance of “prudent regulation,” according to Mechigian. He added that astute regulators in both the United States and the U.K. are drawing clear distinctions between “off-shore and fraudulent” enterprises like FTX and legitimate blockchain technology solutions that facilitate the digitalization of assets, money and commerce.

2022 has been a tumultuous year for politics in the United Kingdom, with three separate Prime Ministers taking office in the space of a few months. Despite the “political economic chaos,” Mechigian said that parliament continues to move toward passing the Financial Markets and Services bill, which would recognize cryptoassets as financial instruments.

FCA’s incoming chair calls for further crypto regulation

The new chair of the UK’s FCA makes condemnatory comments about cryptocurrencies ahead of his tenure in 2023.

The United Kingdom’s Financial Conduct Authority’s (FCA) recently appointed chair has presented an unfriendly attitude toward cryptocurrencies in a cross-party Treasury select committee meeting.

Ashley Alder, who will assume control of the FCA in February, told Treasury members on Dec. 14 that cryptocurrency-related businesses were “deliberately evasive” and suggested the sector facilitated money laundering.

According to a report from Financial Times, the current chief executive of Hong Kong’s Securities & Futures Commission highlighted his belief that the cryptocurrency ecosystem creates risk that requires further regulation from government:

“Our experience to date of [crypto] platforms, whether FTX or others, is that they are deliberately evasive, they are a method by which money laundering happens in size.”

Alder also added that the cryptocurrency sector bundles “a whole set of activities which are normally segregated’ which leads to ‘massively untoward risk.”

The incoming FCA chair’s comments are seemingly at odds with the regulatory body’s efforts to provide a fostering environment for the cryptocurrency industry in the United Kingdom.

The institution told Cointelegraph earlier this year that’s oversight was largely limited to registering locally-based cryptocurrency exchanges for Anti-Money Laundering (AML) purposes. There are 41 exchanges currently listed on the FCA’s registered crypto asset roster.

The U.K. Treasury is now looking to formulate new regulatory rules for the cryptocurrency industry, which could include limits on the amount that foreign companies cansell into the country. This has largely been driven by the collapse of FTX in November.

The FCA is also set to be tasked with monitoring operations and advertising of cryptocurrency businesses as part of the proposed regulatory changes.

UK Law Commission to review international laws on crypto to consider legal reforms

The legal review authority will work to compile law reform proposals for public consultation in the second half of 2023.

The Law Commission of England and Wales will set about reviewing private international legal challenges involving cryptocurrencies through a government-commissioned project.

The review, launched on Oct. 18, will provide clarity on how international law approaches emerging technologies like cryptocurrencies, digital assets and electronic documentation.

The law reform project, dubbed “Digital Assets: Which Law, Which Court?” will outline current international legal rules and their application to digital contexts with the purview of making recommendations for legal reforms to keep United Kingdom laws relevant.

The project is sponsored by the Ministry of Justice and intends to develop reform proposals to be published for public consultation by the second half of 2023.

The announcement highlighted that the proliferation of blockchain technology has generated a number of conflict of law issues, which, in turn, has created legal uncertainty for users, organizations and governments.

A major hurdle is considering which courts have the power or jurisdiction to hear disputes and which laws should be applied. This is also due to the digital nature of cryptocurrencies and digital assets like nonfungible tokens (NFTs), which are intangible in nature, distributed and geographically difficult to define, which further exacerbates legal considerations.

Sarah Green, law commissioner for commercial and common law, highlighted the difficulty in dealing with legal disputes involving the burgeoning space in a statement shared with Cointelegraph:

“With digital assets and other emerging technologies developing rapidly in recent years, the laws that support and govern them have struggled to keep pace. This has led to inconsistencies across jurisdictions, with uncertainty over which laws should be applied and which courts should rule on them.”

The announcement also stressed its aim of supporting innovative digital technologies like cryptocurrencies in the U.K. as the country looks to establish itself as a hub for cryptocurrency adoption.

The Law Commission has been involved in a number of law reform projects involving smart contracts, digital assets and decentralized autonomous organization electronic trade documents. Cointelegraph has reached out to the Law Commission to ascertain further details of the project

Upside capped at $980B total crypto market, according to derivatives metrics

A bearish formation in the total market capitalization chart has been gaining strength after two failures to break its resistance level.

It is becoming increasingly challenging to support a bullish short-term view for cryptocurrencies as the total crypto market capitalization has been below $1.4 trillion for the past 146 days. Furthermore, a descending channel initiated in late July has limited the upside after two strong rejections.

*Total crypto market cap, USD. Source: TradingView*

The 1% weekly negative performance in cryptocurrency markets was accompanied by stagnation in the S&P 500 stock market index, which remained basically flat at $3,650. Uncertainty continues to limit the eventual recovery as worsening global economic conditions have caused trans-Pacific shipping rates to plunge 75% versus the previous year, forcing ocean carriers to cancel dozens of voyages.

Conflicting macroeconomic signals limit risk market upside

From one side, the global macroeconomic scenario improved after the United Kingdom’s government reverted plans to cut income taxes on Oct. 3. On the other hand, investors’ fear increased as global investment bank Credit Suisse’s credit default swaps reached their highest level on Oct. 3. Such instruments allow investors to protect against default, and their cost surpassed levels seen at the height of the 2008 financial crisis.

Below is a list of the winners and losers of the crypto market capitalization’s 1% loss to $935 billion. Bitcoin (BTC) stood out with a 1% gain, which led its dominance rate to hit 41.5%, the highest since Aug. 5.

*Weekly winners and losers among the top-80 coins. Source:* *Nomics*

Quant (QNT) jumped 15% on speculation that its interoperable blockchain protocol would find adoption across governmental and regulatory bodies.

Maker (MKR) gained 10.6% after MakerDAO launched a proposal to decrease the stability fee for the Curve protocol staked Ether (ETH) pool.

UniSwap Protocol (UNI) gained 10.6% after UniSwap Labs, a startup contributing to the protocol, reportedly raised over $100 million from venture capitalists.

Still, a single week of negative performance is not enough to interpret how professional traders are positioned. Those interested in tracking whales and market markers should analyze derivatives markets.

Derivatives markets point to further downside

For instance, perpetual futures, also known as inverse swaps, have an embedded rate 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.

*Accumulated 7-day perpetual futures funding rate on Oct. 3. Source: Coinglass*

Perpetual contracts reflected neutral sentiment as the accumulated funding rate was relatively flat in most cases over the past seven days. The only exception was Ether Classic (ETC), although a 0.50% weekly cost to maintain a short (bear) position should not be deemed relevant.

Since Sept. 26, the yields on the U.S. Treasury’s 5-year notes declined from 4.2% to 3.83%, indicating investors are demanding fewer returns to hold extremely safe assets. The flight-to-quality movement shows how risk-averse traders are as mixed sentiment emerges from lackluster economic indicators and corporate earnings.

For this reason, bears believe that the prevailing longer-term descending formation will continue in the upcoming weeks. In addition, professional traders’ lack of interest in leveraging cryptocurrency longs (buys) is evident in the neutral futures funding rate. Consequently, the current $980 billion market capitalization resistance should remain strong.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Bitcoin holds $19K, but volatility expected as Friday’s $2.2B BTC options expiry approaches

Traders expect an uptick in volatility due to the possibility of September’s $2.2 billion options expiry putting pressure on BTC price near a critical support level.

This week, the $20,000 resistance is proving to be stronger than expected and even after Bitcoin (BTC) price rejected this level on Sept. 27, BTC bulls still have reasons not to give up.

According to the four-month-long descending triangle, as long as the $18,500 support holds, Bitcoin price has until late October to determine whether the downtrend will continue.

*Bitcoin/USD 1-day price index. Source: TradingView*

Bitcoin bulls might have been disappointed by the lackluster price performance as BTC has failed multiple times to break above $20,000, but macroeconomic events might trigger a rally sooner than expected.

Some analysts point to the United Kingdom’s unexpected intervention in the bond market as the breaking point of the government’s debt credibility. On Sept. 28, the Bank of England announced that it would begin the temporary purchase of long-dated bonds to calm investors after a sharp yield increase, the highest since 1957.

To justify the intervention, the Bank of England stated, “were dysfunction in this market to continue or worsen, there would be a material risk to U.K. financial stability.” Taking this measure is diametrically the opposite of the promise to sell $85 billion in bond holdings within 12 months. In short, the government’s credibility is being questioned and as a result, investors are demanding much higher returns to hold U.K. debt.

The impact of the government’s efforts to curb inflation are beginning to impair corporate revenues and according to Bloomberg, Apple recently backed off plans to increase production on Sept. 27. Amazon, the world’s biggest retailer, is also estimated to have shuttered plans to open 42 facilities, as per MWPVL International Inc.

That is why the $2.2 billion Bitcoin (BTC) monthly options expiry on Sept. 30 will put a lot of price pressure on the bulls, even though thebears seem slightly better positioned as Bitcoin attempts to hold on to $19,000.

Most of the bullish bets were placed above $21,000

Bitcoin’s rally toward the $22,500 resistance on Sept. 12 gave the bulls the signal to expect a continuation of the uptrend. This becomes evident because only 15% of the call (buy) options for Sept. 30 have been placed at $21,000 or lower. This means Bitcoin bears are better positioned for the expiry of the $2.2 billion in monthly options.

*Bitcoin options aggregate open interest for Sept. 30. Source: CoinGlass*

A broader view using the 1.49 call-to-put ratio shows a skewed situation with bullish bets (calls) open interest at $1.26 billion versus the $850 million put (sell) options. Nevertheless, as Bitcoin currently stands near $19,000 and bears have a dominant position.

If Bitcoin price remains below $20,000 at 8:00 am UTC on Sept. 30, only $37 million worth of these call (buy) options will be available. This difference happens because there is no use in the right to buy Bitcoin at $20,000 or $21,000 if it trades below that level on expiry.

Bears could pocket a $350 million profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on Sept. 30 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $18,000 and $19,000: 500 calls vs. 19,800 puts. The net result favors bears by $350 million.
Between $19,000 and $20,000: 2,000 calls vs. 16,000 puts. The net result favors bearish bets by $270 million.
Between $20,000 and $21,000: 5,900 calls vs. 12,700 puts. The net result favors bears by $135 million.
Between $21,000 and $22,000: 10,100 calls vs. 11,300 puts. The net result is balanced between bulls and bears.

This crude estimate considers the call options used in bullish bets and the put options exclusively in neutral-to-bearish trades. Even so, this oversimplification disregards more complex investment strategies.

Regulatory pressure could complicate matters for Bitcoin bulls

Bitcoin bulls need to push the price above $21,000 on Sept. 30 to balance the scales and avoid a potential $350 million loss. However, Bitcoin bulls seem out of luck since the U.S. Federal Reserve chairman called for “crypto activities” regulation on Sept. 27, alerting “very significant structural issues around the lack of transparency.”

If bears dominate the September monthly options expiry, that will likely add firepower for further bets on the downside for Bitcoin price. But, at the moment, there is no indication that bulls can turn the tables and avoid the pressure from the four-month-long descending triangle.

Law Commission for England and Wales proposes reforms for digital assets

The U.K. Law Commission called for cryptocurrencies and digital assets to be classed as “data objects” in new reforms aimed at fostering growth and legal protection.

The Law Commission of England and Wales is proposing a number of law reforms to provide wider recognition and legal protections for cryptocurrency and digital asset users.

The institution is reviewing existing legislation on digital assets at the request of the British government in an effort to accommodate the space as it continues to grow in reach and use. The Law Commission announced the call for public consultation from legal experts, technologists and users on Thursday.

The proposal highlights the evolving nature and multi-faceted use of cryptocurrencies, nonfungible tokens (NFTs) and other digital assets. Cryptocurrencies are used as a means of payment, store of value and as a digital representation of ownership or rights to equities and debt securities.

The Law Commission seeks to deliver “wider recognition and legal protections for digital assets” to give a wider range of people, businesses and institutions access to the burgeoning sector. The consultation paper examines how personal property laws apply to digital assets and why they should be classed under this umbrella but in a unique category.

Four key proposals are put forward, starting with explicitly defining a distinct legal category of personal property to accommodate the unique features of digital assets under the banner of “data objects.”

The second will be creating different options for the development and implementation of “data objects” around existing law. Clarifying law around ownership and control of digital assets as well as transfers and transactions are the final two recommendations put forward.

A statement from Commercial and Common Law commissioner professor Sarah Green highlighted the institution’s focus on the unique features of the technology in order to provide a strong legal foundation for the ecosystem to develop organically:

“Our proposals aim to create a strong legal framework that offers greater consistency and protection for users and promotes an environment that is able to encourage further technological innovation.”

The proposed legal reforms are in line with governmental plans for England and Wales to become a hub for cryptocurrency and digital asset systems. The Law Commission’s deadline for public responses to its consultation paper is set for November 4, 2022.