Bitcoin ETF Delay; Cryptopia Enters Liquidation; BitGo Unveils New Institutional Service

Leading the crypto headlines over the past 24 hours was the all-too-familiar announcement by the SEC to delay a decision on whether or not to approve a bitcoin ETF. We also learnt that New Zealand-based crypto exchange, Cryptopia, pulled the pin on its short-lived attempt to revive its business following a recent hack, announcing it has gone into liquidation.

It wasn’t all bad news in the crypto space, however. One particularly promising piece of news came from leading custody provider, BitGo, who announced the launch of a new clearing and settlement service it believes solves a number of problems that have long deterred would-be institutional investors from gaining exposure to the cryptoasset class.

In the markets, bitcoin (BTC) dipped 1.17% for the day to trade at $7,883.1, at the time of writing. Indicative of traders taking BTC-denominated profits, ether (ETH) spiked 9.9% to $226.7, its highest point in over seven months. Additionally, the MVIS CryptoCompare Digital Assets 10 Index is currently tracking at 3,698.1, a 4.9% rise over the past 24 hours.

Ether ETHUSD Ethereum CryptoCompare

SEC Again Delays Decision on Bitcoin ETF

In a document published by the U.S. Securities and Exchange Commission (SEC), the financial regulator revealed it would hold off on making a decision on the Bitwise exchange-traded fund (ETF) proposal filed with NYSE Arca.

Once the Bitwise ETF is published in the Federal Register, a three-week-long public comment period will commence. This will be followed by a two-week-long period for responses. The SEC has until August 14 to make a decision on the Bitwise ETF. Should they - for the last possible time - choose to delay once more, the final deadline will become October 13.

Crypto Exchange Cryptopia Halts Trading, Enters Liquidation

The recently-hacked crypto exchange, Cryptopia, yesterday announced it has halted trading immediately and entered liquidation. In a statement by the appointed liquidators – Grant Thornton New Zealand – they explained they “are focused on securing the assets for the benefit of all stakeholders.”

Customers and suppliers of Christchurch-based Cryptopia will be contacted by Grant Thornton “about its appointment in the next few days,” according to the press release.

BitGo Launches New Settlement Service for Institutional Clients

The world’s leading crypto custody provider, BitGo, announced it is launching a new clearing and settlement service for its institutional, regulated BitGo Trust Company clients. The product – which is an off-chain settlement solution – will ensure cryptoassets never leave custody whilst being transferred. This is possible because BitGo will, on either side of their clients’ trade, act as the custodian.

In addition to reduced counterparty risk, BitGo’s new solution promises to be a more efficient and compliant way for institutional investors to clear and settle cryptoasset transactions.

“Until now,” BitGo’s chief executive Mike Belshe explained in a press release, “in a digital asset trade, one party needed to assume all of the risk and act on the counterparty’s good faith, and this doesn’t really work for institutional investors.”

Bitfinex Wants to Offer 100x Leverage For Crypto Derivatives Trading

Michael LaVere
  • Bitfinex will offer 100x leverage trading for cryptocurrency derivatives
  • According to the exchange's CTO, the hedging product is "ready for prime time"

Cryptocurrency exchange Bitfinex revealed it wants to offer derivatives products with up to 100x leverage for cryptocurrency traders. 

Hedging On Cryptocurrency Derivatives

Chief Technology Officer Paolo Ardoino told The Block on June 25 that the cryptocurrency exchange was ready to ship a 100x leverage product for certain users. According to the post, the project has been under development for some time and is “now ready for prime time.” 

The product was referenced in last month’s whitepaper published by Bitfinex for its $1 billion private token sale of LEO, stating

“Qualified Bitfinex account holders will be able to trade a new hedging product through a derivatives wallet.”

The whitepaper originally claimed that the new hedging mechanism would be released by the end of June, a timetable that fits with Ardoino’s “ready for prime time” statement. 

Ardoino confirmed that only “verified” customers will be allowed access to the product, given the risks involved in such highly leveraged trades. 

The CTO also took to Twitter to quell user concerns over Bitfinex’s existing 3.3x margin trading. Ardoino explained 100x leverage will be “optional,” and that their current leveraged trading products will be unaffected by the release. 

Big Risk, Big Reward

Bitfinex is looking to compete with rival exchange BitMEX, who already offers 100x leverage through its bitcoin perpetual swap contract. However, Bitfinex claims its product is designed as a legitimate hedging tool for clients, rather than a gambling mechanism. 

Max Boonen, CEO of trading firm B2C2, believes the product will only appeal to retail hedgers, as large investors will shy away from the risks involved in 100x trading. 

According to Boonen, 

“There’s nothing wrong inherently about 100x. But as a commercial hedger you want lower leverage margin. The larger investor wouldn’t want to take the risk of 100X, typically. They don’t want to go balls to the wall.”

The cryptocurrency derivatives market has been heating up. Last week bitcoin-bull Mike Novogratz’s Galaxy Digital announced plans to offer cryptocurrency options contracts.

Binance has also reportedly been exploring futures trading. On June 24, Binance CEO Changpeng Zhao tweeted the exchange had executed its first margin liquidation for a BTC short.