Reserve Stablecoin App 'Coming Soon' to Help Areas Affected by High Inflation Rates

The developers of Reserve, an Oakland, California-based stablecoin project, are reportedly planning to launch an app which will allow users to convert cryptocurrencies to fiat money.

According to Reserve’s management, the new app will be released in Angola and Venezuela. In addition, the company will be introducing a utility token, called Reserve Rights (RSR), which can be purchased from Huobi Prime’s token sale platform.

Reserve Dollar, Pegged 1-to-1 With USD

As noted in a press release shared with Cointelegraph, Reserve’s latest stablecoin app will be available on Google Play for Android users in the “coming weeks.” The app’s users will be able to make quick conversions between fiat currencies to Reserve’s stablecoin, the Reserve Dollar (RSD). Reserve’s developers claim that RSD is decentralized and pegged 1-to-1 with the USD.

Commenting on the launch of the new stablecoin app, Nevin Freeman, the co-founder and CEO of Reserve, revealed that his firm intends to focus on helping the citizens of areas affected by extreme levels of inflation (or hyperinflation).

Freeman remarked: 

A lot of people, including some of our investors, discouraged us from starting in Venezuela. [..] The hyperinflation there is the exact problem that Reserve is built to fix, and Venezuela is suffering the most inflation of anywhere in the world right now, so we felt that it had to be done.

Bolivar Losing 10% Of Its Value Every Day

Notably, there are at least 16 countries that have an annual inflation rate of more than 20%. The situation in Venezuela appears to be with worst, as the nation’s national currency, the Bolivar, has been losing almost 10% of its value every day.

Due to political and economic instability, Venezuela’s residents have increasingly been using cryptocurrencies, including Bitcoin (BTC) and Dash (DASH). However, a recent report suggests that cryptocurrencies are too technical for most Venezuelans.

Open Money Initiative Helping Nations In “Closed Economies”

Alejandro Machado, the co-founder of the Open Money Initiative (OMI), a project focused on researching how money is “used in closed economies” and “collapsing monetary systems,” recently revealed that Venezuelans have not completely abandoned the Bolivar.

Machado acknowledged that nobody wants the Bolivar, however they “need it to survive.” In order to help Venezuela’s residents gain access to financial services, Machado’s non-profit organization, OMI is working with globally accessible peer-to-peer (P2P) crypto exchange LocalBitcoins on various projects.

BTC Trading Reaches All-Time High

Available data has confirmed that Venezuela’s residents have increasingly been using cryptocurrencies, particularly Bitcoin. In fact, data from Coin.Dance, a website that tracks trading activity on major bitcoin marketplaces including Paxful, Bisq, and LocalBitcoins, revealed recently that bitcoin trading volume in Venezuela reached an all-time high of 35.9 billion Bolivars.

The previous high was 29 billion Bolivars in total bitcoin trading volume, which was recorded towards the end of April 2019.

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.

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