• FTX was one of the largest players in cryptocurrency, particularly in derivatives trading, before collapsing in November 2020.
• The new boss of FTX, John J. Ray III, recently announced plans to reboot the exchange, raising questions about whether this is possible given the technical issues that plagued it from its inception.
• Interviews with former customers and those in major trading firms pointed to woeful latency issues and API bugs at FTX which could make a revival difficult.
FTX: What Happened?
FTX was once one of the largest players in cryptocurrency, especially when it comes to derivatives trading. But then in November 2020, the exchange spectacularly collapsed due to financial woes that became clear at that time.
Recently, John J. Ray III – who is now the new boss of FTX – announced plans to reboot the exchange. This has sparked questions both from former customers and those in major trading firms as to whether this is possible given some of the technical issues that plagued FTX since its inception.
Technical Issues That Plagued FTX
Interviews with people in these major trading firms revealed a number of problems with how FTX was run technically speaking – such as woefully high latency, bugs within their API for traders to interface with them, and coding mistakes that were made along the way. All of these things combined could make a successful revival highly unlikely.
What Does This Mean For Rebooting?
These technical issues have cast doubt on Ray’s plans for reviving FTX as they suggest there may not be much worth bringing back – something which could explain why no public progress has been made since his announcement two months ago.
It remains unclear what will happen next for FTX but its previous technical struggles may prove too big an obstacle for any kind of successful revival or reboot going forward.
• The U.S. government has announced plans to backstop all deposits at two failed banks, while also pledging to secure at least 8% of the collateral for the USDC stablecoin.
• Circle CEO Jeremy Allaire discussed emergency measures his company took to keep USDC from depegging from the U.S. dollar as well as their plan to turn stablecoins into “straight-through government obligation money.”
• Arthur Hayes proposed NakaDollar (NUSD), a stablecoin backed by bitcoin and bitcoin derivatives, which could provide liquidity and stability if accepted by investors and crypto exchanges.
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Stablecoin Backed by U.S Government
The U.S Treasury Department, Federal Reserve and FDIC announced plans to backstop all deposits at two failed banks, they were also pledging to secure at least 8% of the collateral for the USDC stablecoin. Circle, the stablecoin’s issuer, said it keeps around a quarter of USDC’s reserve assets at about six banks in order to avoid depegging from the U.S dollar during times of crisis or instability in banking systems worldwide.
NakaDollar: A Potential Alternative
Arthur Hayes co-founder of crypto exchange BitMEX proposed NakaDollar (NUSD), a stablecoin backed by bitcoin (BTC) and bitcoin derivatives which would theoretically be deeply liquid and attractive to traders providing stability if accepted and used by investors and crypto exchanges .
Circle CEO Jeremy Allaire spoke about the emergency measures his company took, as well as the serious game theorizing Circle has played over the past two years to spread out its cash and one day essentially turn stablecoins into “straight-through government obligation money.”
“The Hash” Panel Discussion
The panel discussed Hayes’ proposal on how it will affect future of the stablecoin market along with other possible solutions that can be implemented in order to make them more secure during financial turmoil or market crashes .
• Block.one, a Peter Thiel-backed blockchain software company, has exited its equity position in Silvergate Bank due to the bank’s inability to file its annual report last week.
• The company made a contrarian bet on Silvergate in November when its exposure to FTX’s collapse became public.
• Opimas LLC CEO Octavio Marenzi said that macroeconomic conditions are having a bigger effect on crypto markets more generally.
Block.One Exits Silvergate Stake
Peter-Thiel backed blockchain software company Block.one announced it had exited its equity position in Silvergate Bank after the bank was unable to file its annual report last week.
Bet On Silvergate In November
In November, when the bank’s exposure to FTX’s collapse first became known, Block.one made a contrarian bet on Silvergate citing their “strong balance sheet, their strategic positioning, or their market-defiant growth trajectory” which made the bank a “unique investment opportunity.”
Macroeconomic Impact On Crypto Markets
Opimas LLC CEO and founder Octavio Marenzi discussed the crypto market impact of the Silvergate Bank turmoil saying, “the markets reacted with a big yawn.” He adds that the macroeconomic backdrop, with U.S. Federal Reserve Chair Jerome Powell saying interest rate hikes are not finished, “is definitely having a bigger effect on crypto markets more generally.”
Bullish Has No Exposure To Silvergate
Block.one also said its portfolio company Bullish has no exposure to Silvergate whose holding company announced Wednesday the bank would “voluntarily liquidate” its assets and wind down operations.
The exit of Block.one from their equity position in Silvergate illustrates how macroeconomic conditions can have an impact on crypto markets as well as how investors need to be aware of potential exposures within investments before investing into them and assess any associated risks appropriately before making such investments in future.
• Dubai has announced its new crypto regulatory framework, which requires all entities offering one or more crypto-related services to seek authorization and licenses.
• The framework is accompanied by four compulsory rulebooks as well as seven activity-based rulebooks that set out requirements for different types of services.
• Dubai is aiming to become a global hub for crypto and blockchain activity, and is courting companies to set up shop in the emirate.
Dubai’s New Crypto Regulatory Framework
Dubai has unveiled its ambitious new crypto regulatory framework, designed to attract firms seeking regulatory clarity. All entities planning to offer one or more crypto-related services in the jurisdiction must seek relevant authorization and licenses. The framework is accompanied by four compulsory rulebooks for service providers and seven activity-based rulebooks that set out requirements by the type of service offered.
Aim To Become A Global Hub For Crypto And Blockchain Activity
The emirate aims to become a global hub for crypto and blockchain activity, and is courting companies to set up shop in the emirate. By creating a transparent regulatory regime with clear licensing rules, Dubai hopes to create an environment conducive for innovation while ensuring investor protection.
Reaction From The Crypto Industry
The response from the industry has been positive overall, with many praising how “elegantly designed” the framework is. Talal Tabbaa, founder of regional crypto exchange CoinMENA was particularly impressed with this “groundbreaking” effort from Dubai regulators. He noted that it comes at a time when other countries are struggling with knowing where regulation should be headed due to global uncertainty surrounding cryptocurrency markets.
Background on Regulatory Changes
Crypto markets went into a tailspin in 2022, prompting regulators everywhere to double down on setting up or enforcing safeguards which left companies and investors uncertain of their future prospects. This move by Dubai shows that they are serious about creating an enabling environment for blockchain projects within their jurisdiction while ensuring investor protection remains paramount – something other countries would do well emulate if they want their own ecosystems to thrive too.
Dubai’s new regulations show that they are serious about becoming a leader in the global blockchain space whilst protecting investors at all times – something other countries would do well emulate if they want their own ecosystems to thrive too!