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Bakkt Acquires “Certain Assets” from Rosenthal Collins Group

Rosenthal Collins

Intercontinental Exchange-backed digital asset platform Bakkt has announced the acquisition of assets of Rosenthal Collins Group (RCG), in the furtherance of its objective to build the first integrated, institutional grade exchange-traded markets, and custody solution for physical delivery of digital assets.

CEO of Bakkt Kelly Loeffler made the announcement in a blog post yesterday, stating that the project had entered into an agreement with RCG – an independent futures commission merchant – to build on the experience established by the business.

RCG is a 95-year old Chicago-based futures brokerage business which announced last December that it was selling off its customers’ business to Marex Spectron – another world-renowned commodities brokers – out of which Bakkt had opted in to obtain a part of the business assets.

According to Loeffler, the acquisition of “certain valuable assets” was necessary for the development of the Bakkt platform. She highlighted enhancement of risk management and treasury operations with systems and expertise as possible areas of benefits of the new acquisition while expressing her enthusiasm about onboarding the team from RCG.

As per the announcement, there might be a possible delay in the launch of the Bakkt platform as initially scheduled for this month. Loeffler said: “This acquisition underlines the fact [that] we’re not standing still as we await regulatory approval by the CFTC for the launch of regulated trading in our crypto markets.”

The team is sure putting in a tremendous amount of efforts to meet the expectations of the masses after being lauded as a platform to make a significant impact in cryptocurrency adoption since its introduction in August last year.

Loeffler made this clear when she said, “Our mission requires significant investment in technology to establish an innovative platform,” adding that “financial market expertise” is an essential component to developing the “most trusted fintech ecosystem for digital assets”.

Despite the delay, their tracks so far have been lined with some degree of success. The recent seed funding of over USD 182 million goes on to show that a lot of key players are supportive of a successful launch of the platform.


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Coincheck Granted Exchange License a Year After Major Hack

Coincheck Granted Exchange License a Year After Major Hack

Japanese cryptocurrency exchange Coincheck has been granted an operating license a year from its notorious hack that resulted in a loss of USD 530 million.

Effective immediately as of 11 January 2019, Coincheck is now registered with the Kanto Financial Bureau. This will be its first time operating as a licensed cryptocurrency exchange.

In January 2018, Coincheck suffered a security breach which resulted in the theft of USD 530 million in New Economy Movement (NEM) tokens. The firm has said that it has since then adequately addressed any and all security concerns with the platform.

In order to receive the license, Coincheck was required to meet both Japan’s regulatory requirements and prove to the regulators that internal controls had been established to adequately protect investors on its platform. Coincheck claims it has established ”concrete internal controls” and a ”basic philosophy on risk management” to ensure another breach will not take place.

The management of the exchange has also been adjusted, with chief executive officer Koichiro Wada and chief operating officer Yusuke Otsuka both being replaced within the company. Privacy coins such as Dash and Monero were required to be delisted from the platform before it received its license, with the Japanese regulators citing that they failed to comply with anti-money laundering regulations.

Even with an official license granted, Coincheck will still have to win back its reputation to bring in new traders and re-establish itself as a secure platform.

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7 South Korean Exchanges Pass Security Inspection Checklist

7 South Korean Exchanges Pass Security Inspection Checklist

The South Korean Ministry of Science and ICT reported yesterday that only seven cryptocurrency exchanges including Upbit, Bithumb, Gopax, Korbit, Coinone, Hanbitco, and Huobi Korea have passed the security inspection checklist.

A survey was conducted by the Ministry of Science and ICT, the Korea Internet & Security Agency and the Ministry of Economy and Finance, during the period of September to December of 2018 to evaluate the security performance of cryptocurrency exchanges in the country.

The inspection covered the following areas: administrative security, operational environment security, network and account security, database & backup security, and wallet security.

Out of 21 cryptocurrency exchanges that were inspected earlier last year for security compliance, only seven passed the improvement recommendation, leaving the remaining 14 labeled as “vulnerable” to one or more of the 85 security checkpoints. “The 14 exchanges are vulnerable to hacking attacks at all times because of poor security,” the ministry said. Moreover, 17 new exchanges that were inspected for the first time, did not meet the cutoff either. This brings the total of exchanges scrutinized to 38.

South Korea is home to over 100 cryptocurrency exchanges and due to the number of security breaches that have led to the loss of millions of dollars of user assets on exchanges, the Korean government decided to carry out a survey to determine the fitness level of these exchanges.

It would seem the agency expects more of this hacks to occur this year, and are prepared to mitigate the severity of the damage if not completely averted through these security inspections. Director of information security policy at the Ministry of Information and Communication Oh Yong-soo said: “This year, cyber attacks targeting encrypted money are expected to continue”. Yet, most of the inspected exchanges “are still vulnerable”, and there a lot more exchanges are out there whose security status is currently unknown.

The South Korean nation has been pulling resources to ensure the standardization of the industry, a part of that effort includes setting up a representative committee to oversee legislation for the industry and suggest possible adaptive measures to national laws. Though leaning on the side of caution, so far, the nation appears to be a friendlier territory for the industry than some other Asian countries.

Last month in Japan, the Financial Services Agency (FSA) reported having received 190 cryptocurrency license applications from exchanges as 2019 approached. Regulation and standardization seem to be the way forward in the industry.


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Bitmain CEOs to Make Way for New Faces

Crypto Mining Rig Giant Bitmain May Appoint New CEO Soon

Top cryptocurrency mining rig maker Bitmain may be in for some administrative changes soon, with Wang Haichao, currently head of product engineering, tipped to be the new CEO in place of co-CEOs Wu Jihan and Zhan Ketuan, as reported by South China Morning Post.

Currently, no public announcement has been made by the company or any of the parties involved about this major managerial shift. However, the source said people familiar with the matter revealed that this change will reportedly have co-founders Wu Jihan and Zhan Ketuan step aside from managing daily affairs of the company. More so, while they remain as members of the board, they will still be involved in calling the shots on big decisions as “Wu and Zhan, who founded Bitmain in 2013, hold 21% and 37% of the company respectively, according to the IPO prospectus”. Wang is said to have assumed the new role in preparation for the transition since December last year.

Changes happening in the company, including the layoff of about 50% of its staff that occurred last month, are likely due to the bear market conditions that lasted throughout 2018. More so, it was reported that the incumbent decision makers had trouble agreeing with each other and that at one time, Wu was allegedly expelled from the board, though this was later dismissed as a false claim.

With the ongoing reshuffling of administrative chairs, operations may look green for the company once more, as currently, Bitmain has been through a few setbacks and may need to make some strategic changes to make headways in 2019. It is in the process of being listed for an initial public offering (IPO) with the Hong Kong Stock Exchange (HKEX), though it hasn’t been favorable so far, probably due to the volatile conditions of the cryptocurrency market and “essentially the lack of regulation”, according to HKEX.

Wang has compelling hands-on experience in software programming and product engineering. Having graduated from Beijing’s Tsinghua University – the MIT analog in China – he worked as an engineer with Availink, from 2010 to 2017. He seems to be an excellent candidate, being familiar with the operations of the company with respect to product management. It would be of public interest to both shareholders and consumers to see what changes the company will experience during Wang’s tenure. BitcoinNews will track the changes as they unfold.


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Thai Crypto Regulation Makes Progress as 4 Crypto Businesses Get Licenses

Thai Crypto Regulation Makes Progress as 4 Crypto Businesses Get Licenses

The SEC in Thailand announced that the Ministry of Finance has granted licenses to four crypto businesses out of seven applications under review to operate in the country under the Emergency Degree on Digital Asset Businesses B.E. 2561 (2018).

Prior to this development, the seven crypto-related businesses were granted provisional rights to operate under the Emergency Decree on Digital Asset Businesses B.E. 2561 (2018), while their license applications were being reviewed.

Per the announcement, three of the crypto ventures that were granted the license were exchanges while the fourth is a digital asset broker. The four are Bitcoin Exchange Co Ltd, Bitkub Online Co Ltd, Satang Corporation and Coins TH Co Ltd.

Two exchange license requests from Cash2coin Co Ltd and Southeast Asia Digital Exchange Co Ltd were rejected on the grounds of failing to meet the approval criteria with respect to important work systems. These included “systems for custody of client assets and Know Your Customer (KYC) were inconsistent with the SEC’s acceptable standards, while the sufficiency of their IT security and cybersecurity systems could not be verified”.

As a result of the rejection, the financial regulator is granting Cash2coin and SEADEX a deadline of 14 January 2019 to cease all business operations which was previously accorded under temporal arrangements according to the transitional provisions of the Emergency Decree. The SEC, however, mentioned that the rejected applicants can still apply in the future provided they meet the criteria for the application.

One more application from Coin Asset Co Ltd is still under review by the board due to organizational changes in its executive board. However, the SEC noted that the business may proceed with its normal business operation.

Asia as a whole has a rather unequivocal voice when it comes to the stance on crypto. While some are making efforts to accommodate the emerging technology and seeking for a compromise, others are clamping down hard on the industry.

Thailand’s crypto industry frequented the news in 2018; highlights included stern regulations which came down hard on operators and promoters in the country. Recently, it has been found to incline towards the advancement of the industry with a more considerate regulatory framework.

Last year, Thai finance minister Apisak Tantivorawong said the new law was “necessary to comprehensively regulate cryptocurrencies and digital tokens to prevent money laundering, tax avoidance and crime”.

Moreover, over 50 ICO projects and 20 cryptocurrency exchanges had filed for a license to operate their businesses in the region in August 2018, which in turn was indicative of the high interest in digital assets. The Thai SEC secretary general said that “digital assets and cryptocurrency trading in the Thai market are quite active”.

The country has also indicated an interest in applying blockchain technology to its economy. The Director General of Thailand’s Revenue Department Ekniti Nitithanprapas has said that blockchain and machine learning will be utilized in tax avoidance probes.


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Malta Still on Course for “Bitcoin Island”

Malta Still on Course for _Bitcoin Island_

The Maltese government has refuted criticism by the country’s opposition Nationalist Party (PN) leader’s comments that the government has been silenced by the fall in cryptocurrency markets over the past year.

PN leader Adrian Delia recently spoke out against the government suggesting that the current market had caused both silence and inaction following prime minister Muscat’s calls to create a blockchain island and make Malta a beacon for global cryptocurrency.

The Parliamentary Secretariat for Financial Services, Digital Economy and Innovation has hit back suggesting that numerous measures had been taken in the cryptocurrency sector and hinted at even more protection for cryptocurrencies moving forward.

The government also maintained that over the past weeks, a Cyber Security Steering Committee had been launched to make the public aware of fraudulent activity while continuing to promote new technologies such as new industries such as that of AI, e-sports, video-gaming and politics on space.

The Parliamentary Secretariat, the body responsible for the cryptocurrency sector, has maintained the focus is on creating an enabling environment for all stakeholders in the market to thrive.

Both Binance and OKEx signed agreements with the Maltese Stock Exchange (MSX) to create regulated security token exchange platforms in 2018, illustrating the popularity of Malta as a European blockchain and crypto hub. At the end of 2018, Malta’s Parliamentary Secretary Silvio Schembri announced at Delta Summit 2018 that Malta wants to be leading the cryptocurrency race, not the last one in.

With three highly significant bills at their second reading in the Maltese Parliament, Malta is pushing towards being the first country to bring into law every regulation necessary to fully support the cryptocurrency industry. The current proposed legislation, the Malta Digital Innovation Bill, the Virtual Financial Assets Bill, and the Innovation Technological Arrangements Services Bill are major steps along that route.


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Winklevoss Twins Reaffirm Commitment to Bitcoin ETF

Winklevoss Twins Reaffirms Commitment to Making Bitcoin ETF a Reality

The Winklevoss twins have renewed their commitment to bring about the first Bitcoin exchange-traded fund (ETF) in the US. This happened during an Ask Me Anything (AMA) event on Reddit yesterday, the first organized by them since 2015 – around the same time their Gemini crypto trading platform was launched.

In the past year, many investors were overwhelmed by the downtrend in the cryptocurrency markets and focused more on price measures to determine success. However, in the midst of misrepresentation of valued propositions, companies were making progress in their development timeline. One such company was Gemini.

According to Cameron, 2018 was a banner year, as the company was able to hit major milestones and considered it a successful growth period for the industry.

Though Bitcoin – the flagship cryptocurrency and the largest cryptocurrency by market capitalization – had suffered a hit and dropped by approximately 81.98% during 2018, the twins are still confident that the cryptocurrency is “most likely the winner in the long term… Bitcoin is certainly the OG crypto”.

During the AMA session, a Reddit user asked the twins about their previous bullish speculation price of USD 40,000 for Bitcoin in the last AMA, to which Tyler responded saying:

“Our thesis around Bitcoin’s upside remains unchanged. We believe Bitcoin is better at being gold than gold. If we’re right, then over time the market cap of Bitcoin will surpass the [approximate] 7 trillion-dollar market cap of gold.”

For the take-home, the twins did leave the attendees a hint of what cryptocurrency in the future should look like: “Success is a future where the internet looks dramatically different than it does today (i.e., decentralized and open) and your money does things that your current money cannot do (i.e., it works like your email).”

In another response, Cameron said: “I can see a future where everything (including fiat) is crypto (e.g., Gemini dollar).”

With respect to derivative markets like the ETF, the twins said they understand the regulator’s concerns as related to “increased marketplace surveillance”, and are currently taking steps to address those concerns through inclusive surveillance on their platform.

Moreover, they said that efforts are geared towards making cryptocurrency safe and clear of all stigma: “Marketplace Surveillance is commonplace in equities and derivatives markets — so we aren’t re-inventing the wheel here, just bringing best practices into crypto.” They further reassured that they were “committed as ever to making an ETF a reality”.

The Winklevoss twins are not the only ones motivated by crypto adoption. During the past weeks, institutional investment portals have been making appearances, with the likes of Coinfloor’s CoinFLEX, Overstock’s securities trading platform tZERO’s patent, Japan’s Bitcoin ETF, and imminent Bakkt all hitting the headlines.


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Overstock’s tZERO Wins Patent for Crypto Integration Platform

overstock tzero patent crypto integration bitcoinnews

Overstock’s security token trading subsidiary tZERO has won the patent for a “crypto integration platform” designed to integrate the cryptocurrency market with legacy trading systems.

The design draws a premise from the fact that “recent increasing adoption of cryptocurrencies (e.g., Bitcoin) worldwide creates challenges for existing trading systems”. The integration involves a complex but precise process of communication between blockchain technology and the existing traditional market infrastructures involving the exchange of market information from different sources.

The document states: “The Crypto Integration Platform aggregates market information from the crypto exchanges and serves as a router to locate the best price in the crypto market for the digital asset or liability involved in the transaction.”

Transactions involve a wide variety of asset class making the platform a bridge between traditionally-traded asset class and digital currencies. The document further explains the composite asset structures:

“The Crypto Integration Platform receives orders to trade digital transactional items such as digital assets, liabilities, commodities, and/or currencies (e.g., digital securities, digital interests in securities, cryptocurrencies) for other digital transactional times such as digital representations of funds (e.g., tokens, cash, cash equivalents such as cryptocurrencies) on a cryptographic (“crypto”) exchange (i.e., an exchange that trades digital transactional items) from broker-dealers and translates the orders into crypto orders.”

One of the express quality of the system is the cryptographic signature of transactions before and after executing those orders. This “ensures authentication, authorization, and provenance”, according to the document.

More so, the cross-linking of legacy trading systems and cryptocurrency exchanges allows a wide pool of participating companies to access capital, while investors and traders can also access shares from the former.

The tZERO patent describes the benefit of the system as one that accords “guaranteed settlement, transparency of ownership and easy money movement, and secure settlements”.

The Alternate Trading System (ATS) for securities by tZERO has gained momentum since its debut, and it has pooled interest from high-profile investment firms, raising what may seem to be largest recorded investment for blockchain startup so far. On the mothership, Overstock announced that it is first to pay tax in Ohio using Bitcoin.

Efforts from this company continue to close the gap between virtual cryptocurrencies and mass mainstream adoption. Other agents driving similar objectives include derivative markets to be launched by Bakkt, ErisX, and other proposed products from the Japanese jurisdiction.


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Coinfloor to Launch Derivative Crypto Futures Amid Tough Market

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Top UK cryptocurrency exchange Coinfloor has told Bloomberg, that it is venturing into the derivatives market despite the seemingly poor market outlook and fierce competition in the futures market, with physically-delivered Bitcoin futures the new emerging derivatives for the asset class.

The CoinfloorEX spinoff of the Coinfloor cryptocurrency exchange will be offering the new physical Bitcoin futures services to sophisticated Asian traders. Meanwhile, it has been renamed to Coin Futures and Lending Exchange (CoinFLEX) for this purpose.

According to the CEO of CoinFLEX Mark Lamb, who is also a co-founder of Coinfloor, “bear cycles in crypto can go on a long time, but ultimately it’s an asset class which is one of the most fascinating, volatile, which is great for traders”. Lamb also downplayed the current market condition, confident that crypto will someday become globally accepted, saying that “it has the potential to be one of the major currencies in the world”.

CoinFLEX will have its base in Hong Kong. The proposed derivatives will include physical futures for Bitcoin, Bitcoin Cash, and Ethereum with leveraging of up to 20 times. Comparatively, top cryptocurrency exchange BitMex, also having a sizeable market in Hong Kong, will be a competitor as it also offers leverage of up to 100 times on some of its contracts. However, CoinFLEX has the advantage of physical delivery as against cash settlements that are prone to manipulation.

Prominent crypto movers have been named as members of a consortium owning the project, including Roger Ver, Mike Komaransky and Trading Technologies International Inc. Meanwhile, Coinfloor is also reported to be retaining an equity stake in the new venture.

It would seem that the market for institutional investors is constantly being expanded with multiple derivative options. “Crypto derivatives could become an order of magnitude larger than spot markets and the main thing that’s holding back that growth is the lack of physical delivery,” said Lamb.

Last year, talks about the proposed Bakkt platform – an Intercontinental Exchange (ICE) project – constantly drove up the expectations of cryptocurrency holders and investors. Its recent announcement included a successful seed round funding of over USD 182 million, and a scheduled launch early this year, however, the date “will be amended pursuant to the CFTC’s process and timeline”.

Another derivative platform, ErisX, recently reeled in USD 27.5 million from Fidelity Investments, Nasdaq Ventures, and other investors during a seed funding round. It is also waiting for approval from financial regulators before launching this year.

Recently, the Japanese financial regulator hinted on the possibility of the launch of exchange-traded funds (ETF) that will be based on the new asset class.


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Japan Talks Bitcoin ETF, Ignores Futures Package

Japan Talks About Bitcoin ETF Ignoring Futures Package

As reported by the news outlet Bloomberg today, the financial regulator in Japan has abandoned its plans to allow Bitcoin futures but will consider the possibility of an exchange-traded fund (ETF) based off the new asset class.

The source cited someone who was familiar with the development as saying that the Financial Service Agency (FSA) was “gauging industry interest in ETFs”. This comes after recent developments show that the regulator has decided against the decision to revise the nation’s security law that would have provided an opportunity for cryptocurrency futures and options to be listed on major financial exchanges. The report suggested that this change came “after concluding that such products would achieve little besides stoke speculation”.

This may have cut short the expectations of a few of those expecting Bitcoin futures to be in effect at the passing of the revised law.

Last month, the financial regulator was reported to have received as many as 190 cryptocurrency license applications from exchanges after granting the local crypto sector a self-regulatory status under the supervision of Japan Virtual Currency Exchange Association (JVCEA).

According to the news outlet, the new development, however, places Japan in contrast to the US, as the latter may permit the trading of physical Bitcoin futures, whereas Japan is leaning more in favor of ETFs. Many ETFs have been proposed to the financial regulator in the US, without any positive outcome till date.

The introduction of the different derivative instruments is aimed at introducing new players from the institutional class investors. However, this has proven to be a rather slow convention. Reports from exchange data suggest that the institutional demand from the pioneers of the asset class derivative market Cboe Global Markets Inc and CME Group Inc have fallen short of expectations and waver around USD 81 million after a year-long run.

2018 has been reckoned as the year of the bear, after the introduction of Bitcoin derivatives in late 2017 may have propelled the cryptocurrency markets to new highs. The year 2019 has been filled with enthusiasm as expectations of more institutional involvement to restore the performance of the market peaking.


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