Twitter is Developing Decentralized Standard for Social Media, Bakkt Launches 1st Regulated BTC Options, Crypto Bank SEBA Expands to 9 New Countries

This week (9-14 December) in Blockchain & Crypto was super interesting and really productive - Malta-based cryptocurrency exchange OKEx announced that it will launch crypto options trading on December 27, Bakkt has launched the first regulated Bitcoin (BTC) options and cash-settled futures in the US, Twitter is funding a dedicated team to develop a decentralized standard for social media, and much much more!

About this and more, in the newest issue of Weekly Blockchain & Crypto Digest. Enjoy!

OKEx to Launch Options Trading This Month

Malta-based cryptocurrency exchange OKEx announced that it will launch crypto options trading on December 27.

In a press release on December 9, the exchange said that the addition of options makes OKEx the “first crypto exchange to offer C2C, spot, futures, perpetual swap, and options trading under the same roof.” 

The options will allow the platform’s users to buy or sell an underlying asset after paying a premium. While real options trading will begin on December 27, simulated trading is scheduled to start in just three days, on December 12.

To implement options, the firm reportedly upgraded its entire system and infrastructure, including the addition of an anti-price manipulation system.

The option price is determined in real-time by employing the Black-Scholes pricing model, which considers volatility, option type, underlying asset price, time, strike price and risk-free rate. OKEx CEO Jay Hao commented:

Options is a unique instrument that enable traders to manage, price and hedge the volatility of crypto assets with a combination of option contracts. It also gives a trader the ability to take advantage of more than just market direction. As the crypto market evolves, we aim to build a complete derivatives product suite, delivering solutions to optimize users’ trading strategies.

Users wanting to access OKEx’s options trading service must first undergo Know Your Customer procedures and pass a suitability test proving that they understand the products they are buying.

Bakkt Launches 1st Regulated BTC Options

The Intercontinental Exchange (ICE)’s digital asset platform Bakkt has launched the first regulated Bitcoin (BTC) options and cash-settled futures in the United States.

According to an announcement on December 9, Bakkt is now using its physically settled Bitcoin contracts as a benchmark to build complementary products.

The news was announced in a blog post by Bakkt COO Adam White. The post stated:

By starting with the physically delivered Bakkt Bitcoin (USD) Monthly Futures, we have a benchmark contract that provides the foundation for us to develop complementary products based on the needs of our customers.

The two new products include Bakkt Bitcoin (USD) Monthly Options and Bakkt Bitcoin (USD) Cash-Settled Futures.

According to the post, the Bakkt’s monthly options product is the first regulated Bitcoin futures contract regulated by the United States Commodity Futures Trading Commission. Price discovery occurs within a federally regulated market and has no exposure to unregulated Bitcoin spot markets, the announcement notes.

The cash-settled futures product is a new contract that will be initially available on ICE Futures Singapore, an approved exchange in Singapore. The contract is based on the settlement price of the benchmark Bakkt Bitcoin monthly future contract and provides an option for participants who are unable to trade our physically delivered contract, the blog post reads.

The news comes after Bakkt CEO Kelly Loeffler was appointed to a U.S. Senate seat. According to media reports, Loeffler will replace Sen. Johnny Isakson (R-GA), who plans to retire at the end of the year.

Bakkt platform is one of the most promising cryptocurrency-related initiatives to date as its physically settled Bitcoin futures have become one of the most talked-about products in crypto.

Bank of China Uses Blockchain to Issue $2.8B Worth of Financial Bonds

The adoption rate of blockchain technology in China continues to impress as the Bank of China has reportedly issued 20 billion yuan ($2.8 billion) in blockchain-based special financial bonds for small and micro-enterprises.

According to local news outlet Sina Finance in early December, the funds are specifically used to issue loans to these Chinese small and micro-sized companies to support their continued development in the economy.

As of the end of September, the Bank of China issued around 404 billion yuan ($57.7 billion) to 410,000 small and micro enterprise customers, representing an increase of 35% since a year ago.

As a reference, micro-enterprises generally have fewer than 10 employees, while small companies have up to 50 employees.

The news comes as the Chinese government is attaching an ever-increasing level of importance to the digital economy. Earlier in December, Forkast Insights, the research arm of Asia-based Forkast, took an in-depth, comprehensive look at how blockchain technology is integrated in China.

The report pointed out that blockchain technology is rapidly maturing in China and has a slew of “real-world, practical use cases that are far beyond the experimental stage.” 

Twitter is Developing Decentralized Standard for Social Media

Jack Dorsey, the founder and CEO of Twitter and payments operator Square, has revealed that Twitter is funding a dedicated team to develop a decentralized standard for social media.

In a series of tweets on December 11, Dorsey set forth a number of challenges social media networks face in their operations. These include the shift away from content hosting and removal to recommendation algorithms directing users’ attention, and content that sparks controversy and outrage rather than healthy and informative conversations.

Dorsey went on to address new challenges centralized solutions are struggling to meet, specifically saying that “centralized enforcement of global policy to address abuse and misleading information is unlikely to scale over the long-term without placing far too much burden on people.”

To address these challenges, Dorsey suggested the creation of a decentralized standard for social media, alongside the development of an open community including companies and organizations, researchers, civil society leaders, among others.

As such, Twitter is funding an independent dedicated team of up to five open source architects, engineers, and designers. Dorsey further said: “It will take many years to develop a sound, scalable, and usable decentralized standard for social media that paves the path to solving the challenges listed above.”

Swiss Crypto Bank SEBA Expands Services to 9 New Countries

Switzerland-based cryptocurrency bank SEBA has expanded its services to nine new countries. According to Finance Magnates on December 12, SEBA revealed that accounts are now fully operational for institutional clients and accredited investors in Singapore, Hong Kong, the United Kingdom, Italy, Germany, France, Austria, Portugal.

As previously reported, SEBA Bank AG (formerly SEBA Crypto AG) is a fully-regulated institution, having secured a banking and securities dealer license from the Swiss Financial Market Supervisory Authority (FINMA) in August 2019.

As part of its account services, SEBA offers a SEBA wallet app, e-banking services and SEBA card facilities, with support for five major cryptocurrencies: BTC, Ether, Stellar, Litecoin and Ether Classic. 

The bank provides investors with both crypto-crypto and crypto-fiat conversion services and offers enterprise accounts for blockchain firms and their employees.

It is one of two cryptocurrency banks in Switzerland to have received regulatory approval from FINMA, the other being Sygnum. Sygnum is likewise eyeing global expansion and is now ostensibly in talks with regulators to seal a banking license in Singapore.

Libra Updates White Paper, Removes Dividends for Libra Association

The white paper for Facebook’s proposed Libra currency has been quietly updated, according to a December 10 article written by Georgetown University law professor, Chris Brummer. Aside from expected amendments reflecting the revised Libra Association members, the biggest change is the removal of dividends payable to those early investors.

While the initial Libra white paper published in June specified that interest on the reserve assets would be used to cover system costs, keep transaction fees low, support growth, and pay dividends to the early investors i.e. Libra Association members, mention of dividends has now been removed, so it now reads: 

Interest on the reserve assets will be used to cover the costs of the system, ensure low transaction fees, and support further growth and adoption.

The problem with awarding dividends, and potentially the reason for the change according to Brummer, is that it created a potential conflict of interest between Libra Association members, and end-users of the currency.

??All You Need to Know About Facebook's Upcoming Cryptocurrency??

To encourage uptake of Libra, the reserve assets with which they are backed should be stable. However, if dividends are paid from the interest on these assets, this gives an incentive to load the reserve with higher-risk assets.

This in turn would reduce trust in and uptake of Libra, because the supposed stablecoins could lose their value.

There is also the possibility that the changes are in some way addressing concerns that Libra may be classified as a security.

Sweden's Central Bank to Partner with Accenture to Launch E-Krona

Sweden’s central bank is planning plans to create a pilot platform for a digital currency known as the e-krona.

While Switzerland took a negative stance towards a central bank digital currency (CBDC) earlier, with its government claiming that it could do more harm than good, Sweden is starting to explore the potential benefits of e-krona, Reuters reports December 13.

According to the report, Riksbank, Sweden’s central bank, said that it would partner with Irish professional services company Accenture to create a pilot platform for a digital currency dubbed the e-krona.

By initiating the move, the Riksbank aims to bolster its knowledge about the potential of the digital currency as the bank reportedly said:

The primary objective of the e-krona pilot project is to broaden the bank’s understanding of the technological possibilities for the e-krona.

As noted in the report, the Riksbank has been looking closely at whether it should issue a digital currency, as the use of cash has declined sharply in Sweden in recent years.

Indeed, the Riksbank appears to have been closely observing the issues surrounding digital currencies so far. In mid-October, the head of Sweden’s Riksbank considered Facebook’s Libra stablecoin project an “incredibly important catalytic event.” Riksbank Governor Stefan Ingves noted that such initiatives trigger the world’s central banks to ready themselves for digital transformation.

The news comes against the backdrop of Switzerland, which is the homeland to the Crypto Valley Association, abruptly shutting down the idea of issuing a digital Swiss franc earlier. The Federal Council concluded that a CBDC cannot meet expectations for payment efficiency, effective monetary policy, and a more stable financial system.

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About: I am a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading company's expansion into Europe , I'm an active member of FinTech community and a TechFin evangelist.

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