Former Coinbase Executive Joins Bitstamp Exchange as Head of US Operations

Bitstamp, a London-based cryptocurrency exchange, has reportedly hired Hunter Merghart, the former Head of Trading at Coinbase. Merghart, who also previously worked as Head of Equity Trading at Barclays, has now been appointed as Head of US Operations at Bitstamp.

Merghart had left his job at San Francisco-based crypto exchange Coinbase in October 2018 after spending only 6 months there. According to Merhart, he resigned from his role at Coinbase because he did not receive adequate resources and information regarding how to build cryptocurrency-related solutions for institutional investors.

Merghart Is The “Perfect Person To Lead US Operations”

In his new role as Head of US Operations at Bitstamp, Merghart will be expected to assist institutional clients at Bitstamp’s New York office. This, after the exchange operator was granted a BitLicense from the New York Department of Financial Services (NYDFS) last month.

Nejc Kodrič, the CEO at Bitstamp, said that Merghart is:

the perfect person to lead our U.S. operations, which includes making sure our retail and institutional investors have a platform and service that is equal to what they would find at any traditional exchange anywhere in the world.

Notably, Bitstamp is now the 19th crypto and blockchain-related firm to have received a BitLicense - which gives legal permission to businesses to provide financial services to New York residents.

After having acquired regulatory approval, Bitstamp’s management now intends to expand its operations in the US. Commenting on the exchange operator’s plans to serve US-based customers, Kodrič said that his firm had been looking to enter American markets but its plans were in a “passive” phase due to regulatory restrictions.

“This Is An Amazing Opportunity For Me”

In statements shared with Coindesk, Merghart noted that he “really believes in the strategy that the team has put in place and can’t wait to help execute it.” He also mentioned: 

This is an amazing opportunity for me to take what I’ve learned in both traditional finance and crypto to a larger role where I can help grow the U.S. business of the largest European crypto exchange.

In order to accommodate new institutional clients, Bitstamp’s developers have upgraded the trading platform’s matching engine and they’ve also integrated various surveillance tools. The new surveillance platform was reportedly developed by Cinnober, a fintech firm that provides proprietary software for large-scale financial markets (such as stock exchanges).

CME Looks to Double Bitcoin Futures Limit, but Is This Wise?

The Chicago Mercantile Exchange (CME) has a new request for its regulator, as it looks to double open position limits on bitcoin futures contracts in the face of significant interest.

Nasdaq reports that the CME has already petitioned its regulatory body, the Commodity Futures Trading Commission (CTFC), asking for an increase from 1000 contracts per spot month to 2000 per investor. Each contract represents five BTC, so essentially, at its peak,  a single investor's total position may edge towards a monumental 10,000 BTC.

This is in direct response to the contract's recent growth which is currently depicting record levels of activity, citing $370 million being traded per day. A spokesperson for the CME noted that the idea to increase limits was proposed on the continued maturity of the market:

Based on the significant growth and acceptance of our financially-settled CME Bitcoin futures markets, as well as our analysis of the underlying bitcoin market.

However, as Nasdaq writes the increase in the upper limit of positions is somewhat superfluous. As of July, the number of open interest contracts reached an all-time high of just 6100; given this, it seems the CME may be future-proofing.

Open to Manipulation?

However, concerns remain about the limit increase, as without them, the potential for manipulation rises; often to the detriment to the underlying asset. Although, as per the CTFC website, the threat of manipulation from bitcoin futures contracts is "low":

In general, position limits are not needed for markets where the threat of market manipulation is non-existent or very low.

Instead, Nasdaq posited that this might point to a lessening on the CTFC's strict rule of bitcoin; as well as a maturing of the market in general.

Nevertheless, some believe the CME's bitcoin futures contracts do pose a significant threat to the price of BTC; with some suggesting that blatant manipulation continues unchecked within the market.

As reported, there seems to be a correlation between the expiry dates of CME bitcoin futures contracts and a lull in the price point of BTC. In several instances, a significant drop in bitcoin's price has coincided with a closure from the CME. The most recent example of this occurred on Labor Day, September 2, when bitcoin rose an extraordinary 8% shortly after the CME shut.

Crypto analyst, Alex Kruger, highlighted this, noting the large gaps which formed on the CME chart, from the price discrepancy before and after closing.

This has become a pretty accepted practice within the market. Kruger has even gone to the lengths of compiling statistics each time this phenomenon transpired:

On these occasions, bitcoin cited an average 4.6% price discrepancy following the close of the CME.

Whether this is a coincidence or the market is indeed being actively manipulated is as yet unclear. Either way, with the increase of these limits it might be only a matter of time until we know for sure.

Featured Image Credit: Photo via