It was a fairly static week for crypto markets on the whole. Although markets threatened to dip on Wednesday after the SEC’s new ETF rejections, a modest recovery soon set in, allowing total market capitalization to finish roughly unchanged over the week. This could suggest that markets have completely priced in any ETF-related bearish news.

SEC Rejects 9 Bitcoin ETF Proposals

The US Securities and Exchange Commission (SEC) has issued rejections to Bitcoin ETF proposals from ProShares, Direxion and GraniteShares. In all three cases, the regulator used the same reason for the rejection, namely that they fail to demonstrate that their proposals are “consistent with the requirement…that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.” The SEC also stressed that the rejections are not based on any evaluation “of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment”.

And although the three proposals were linked to the Bitcoin futures market rather than a fund holding Bitcoin directly, the SEC cited a letter from one of the current futures markets, CBOE, that “the current bitcoin futures trading volumes on CBOE Futures Exchange and CME may not currently be sufficient to support ETPs seeking 100 [percent] long or short exposure to bitcoin.” That said, the silver lining for the rejected proposals is that the SEC also stated that they will be subject to review at a later date.

China cracks down on cryptocurrencies…again

On Thursday, the South China Morning Post reported that over 120 offshore cryptocurrency exchanges have been blocked by Chinese authorities. The government has also allegedly strengthened its monitoring of new crypto news sites and announcements of ICOs, both of which will face a shut down and a blockage of user IP addresses.

The crackdown swiftly follows news that Beijing prevented venues such as hotels, shopping malls, and offices from promoting or hosting events supporting cryptocurrencies. A separate ban governing eight crypto media outlets has also come into effect, with many believing that these recent moves are being made to curtail increasing financial risk and instability.

South Korea’s biggest exchange posts $100 million profit


Despite the ongoing bear market, South Korea’s largest crypto exchange Upbit has posted a $100 million profit for Q3 2018. Yonhap reports a sizeable profit for Upbit, which is a subsidiary of Korean tech giant Kakao. Along with its subsidiaries, Kakao is estimated to have over 90% market penetration in its respective markets across fintech, taxi services, messaging, and social media, and revealed in March that will be integrating cryptocurrencies for their 12,000 merchants and over 100 million users.

Upbit’s profits also easily outmatch the $35 million profit reported by Bithumb, Korea’s second-largest exchange. Bithumb is reportedly expected to record less than 20% of its net profit for last year, which came in at nearly $400 million. The exchange notably suffered a security breach in June that saw $17 million worth of crypto being stolen, although it has promised to reimburse victims of the theft.

Coinbase Trading Volumes Plummet

Citing data from CoinApi, cryptoasset research firm Diar reported that USD-denominated cryptocurrency trading has significantly dropped in 2018. Although other cryptocurrency exchanges such as Binance have seen steady or rising volumes, Coinbase has seen its own trading volumes slashed, from $21 billion in January, to $3.9 billion in July.

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Bitstamp and Kraken, which offer USD trading pairs, also experienced steep drops in their trading volumes. OKEx which is one of the world’s largest exchanges, meanwhile, hit a new record high in trading volume, increasing from $2.8 to $2.9 billion between June and July.

Wozniak reveals involvement with crypto startup

Speaking to NullTV, Apple co-founder Steve Wozniak revealed he will soon be entering the blockchain space with crypto startup Equi Capital. “I’m involved with, very soon, my first time being involved in a blockchain company….Our approach is not like a new currency, or something phony where an event will make it go up in value. It’s a share of stock, in a company. This company is doing investment by investors with huge track records in good investments in things like apartment buildings in Dubai.”

Wozniak also reserved praise for Ethereum, which he described as being similar to Apple, with thousands of companies developing their own applications on the platform. “Ethereum provides the tools for a blockchain application of your own… I see more people using Ethereum that way, but Bitcoin is still digital gold.”

Is Iran’s national cryptocurrency ready?

According to local news outlet Financial Tribune, Iran’s National Cyberspace Center has stated that the draft document of the state-backed cryptocurrency draft is now ready. As ordered by President Hassan Rouhani, the project appears to have completed the final stages of development, with the deputy director in charge of drafting regulations for Iran’s Supreme Cyberspace Council, Saeed Mahdiyoun, revealing that a national cryptocurrency is being actively pursued by Iran’s cyberspace authority.

The state-issued token is seemingly being expedited to avoid U.S. sanctions on Iran that are due to be imposed again shortly, as well as to facilitate the transfer of money to and from anywhere in the world. Iranian authorities are also reportedly looking at using blockchain to circumvent specific challenges such as a complete ban on acquiring US dollars that was enacted in early-August.

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Justin Chan
Dr Chan founded (DDI) and is the CEO for JCube Capital Partners. Specialized in strategy development, alternative data analytics and behavioral finance, Dr Chan also has extensive experience in investment management and financial services industries. Prior to forming JCube and DDI, Dr Chan served in the capacity of strategy development in multiple hedge funds, fintech companies, and also served as a senior quantitative strategist at GMO. A published author at professional journals in finance, Dr. Chan holds a Ph.D. degree in finance from UCLA.


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