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Hedge fund that shorted GameStop closes as $1.13B GME stock offer completes

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One of the hedge funds badly burned in the infamous GME social media driven short squeeze is closing down, while GameStop itself has just completed its $1.13 billion equity offering.

According the Financial Times, London-based White Square Capital operated by Florian Kronawitter has closed its main fund and will return capital to investors.

White Square Capital reportedly had $440 million in assets under management (AUM) at its peak. The hedge fund was one of many that suffered double digit percentage losses from short positions in January, when the Wall Street Bets subreddit helped pump GME’s price from $21 on Jan. 12 to around $345 on Jan. 27.

However the FT reported a source as saying the fund’s closure was unrelated to its GameStop misadventure. In a letter to investors, co-founder Kronawitter cited the traditional equity long-short model was being “challenged” in the current financial climate, as there are “way too many fish in the pond” that operate with the same long-short strategy.

“The traditional edge is being arbed away [eroded by other investors], there’s an oversupply of capital,” Kronawitter said.

The co-founder also highlighted that the hedge fund’s opportunities for arbitrage have “diminished” due to the “onslaught of capital caused by central bank monetary interventions.”

These factors are also accompanied by the relative ease of access to information and cheaper investment alternatives, with Kronawitter asserting that it brings it to question how the management fees from hedge funds can be justified in the current market.

In a Reddit thread discussing the news on the r/wallstreetbets subreddit, members of the group shared their delight, with user “turtleduck77” likening hedge funds that shorted GME to dominoes falling, noting that its “Time to invest in dominoes! The game not the pizza.”

Related: New decentralized crypto exchange is inspired by r/Wallstreetbets

GameStop completes ATM offering

Yesterday GameStop announced the completion of an at-the-market (ATM) equity offering, with the company selling five million shares of common stock generating almost $1.3 billion before commissions and offering expenses.

“GameStop will use net proceeds from the ATM Offering for general corporate purposes as well as for investing in growth initiatives and maintaining a strong balance sheet,” the announcement read.

One of the growth initiatives likely to be funded is GameStop’s NFT marketplace set to be launched on Ethereum.

While details are sparse at this stage, the firm’s blockchain division is reportedly headed by the former business operations leader of Ethereum and Loopring DEX, Matt Finestone.

The smart contract platform is based on the ERC-721 NFT standard and was created by foobar, a developer who has worked on wrapper solutions for the classic version of Crypto Punks, HD Mooncats, and MooncatHelper NFT projects in the past.

While top crypto assets and memecoins have been in a major down trend since May 12, GME’s meme stock has increased 36.6% within that time frame, increasing from $161 on May 12, to $220 as of today, according to TradingView.

In comparison, data from CoinGecko shows that crypto’s nearest equivalent in meme coin Dogecoin has cooled down, has dropped 64% — declining from a price range of $0.50 on May 12, to $0.18 today.

Hedge fund that shorted GameStop closes as $1.13B GME stock offer completes

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Chris Giancarlo: U.S. risks becoming ‘backwater’ without central bank digital currency

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One of the few high-profile public officials to have served under both the Obama and Trump administrations, Chris Giancarlo is a former Wall Street executive-turn-regulator who is widely-respected by nearly all parties on Capitol Hill. As the former Chairman of the Commodities Futures Trading Commission, however, his latest venture, the Digital Dollar Foundation, might well test his soft touch with politicians.

The former regulator is now leading the Foundation towards five pilot programs set to launch this year, part of a broader effort to help the United States regain the lead in a race against China towards a functioning CBDC.

According to Giancarlo, however, the US’s priorities when it comes to a CBDC shouldn’t merely be jingoistic:

“What’s very clear, [is] that China intends their digital yuan to be an instrument of state surveillance. […] And this is why it’s one of the reasons why the digital dollar project, we’re so animated, because we feel that our new mission is to make sure central banks wake up to this and the US Fed wakes up to this, that these social values that got us here, the rule of law, a free capital markets, free enterprise, zones of individual economic privacy, are ingrained in a new digital future of the US dollar, and that we don’t allow ourselves to be taken in by what China’s doing and match that state surveillance approach.”

However, the race to a CBDC isn’t merely about maintaining current US values, but also potnetially about unlocking new forms of smart contract-based value for the wider population. 

“The notion of a digital currency, whether it be sovereign and non-sovereign, tied to smart contracts, allows money to solve the old problem of being able to move it in place, i.e. moving around the globe as easily as you could send a text message, but also move it in time. Heretofore, money was a temporal thing, but with a smart contract you can say, I want to program my money today to go to my one grandchild in the future once they graduate college and all of those contingencies can be programmed in. […] With a programmable digital currency, you can program it today to move around the globe in space, but move around the globe in time. And that is such, I think, such a powerful construct.”

Ultimately, this work is part of an effort to ensure that America maintains technological supremacy. 

“You can’t stop the march of technology in time, and if you do, you become a backwater. We in the United States have always been open to innovation and we must be open to this innovation as well. In a prudent way, in a way that’s in correspondence with our society that expects investor protections and a role for government. […] And it’s one that I’m very excited to be involved in.”

Watch the full interview here:

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Chris Giancarlo: U.S. risks becoming \’backwater\’ without central bank digital currency

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Portugal Grants First Crypto Exchanges Operating Licenses

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For the first time ever, Banco de Portugal has approved operating licenses to regional cryptocurrency trades.

Recently, the central bank gave out the statement that Portuguese-based trades “Mind the coin” and “Criptologia” are now enlisted as virtual assets service providers.

The central bank has issued only these two names in the list on their official website. Banco De Portugal took around nine months to finalize the decision. In September 2020, Criptojola was reported to perform its initial registration to give out its services as a virtual assets provider.

 Mind the Coin and Criptoloja have been given permission to perform crypto exchange services between fiat currencies and different virtual assets within the Portuguese region. Furthermore, they are also allowed to cover various transfer services, safeguarding, and administration works for such assets.

Banco De Portugal has been awarded as one of the most crypto-friendly nations in entire Europe, and the whole continent seems to be proud of it.

In May 2021, Jean Galea, a well-known investor, and blogger said that Portugal is becoming a haven for all the individuals involved in the crypto world in one of his write-ups. Cryptocurrency income continues to be immune from capital gains taxes and VAT in Portugal unless the income is associated with professional trading activity.

Which other European countries are involved in Crypto exchanges?

Nonetheless, Portugal isn’t the only European country to accept crypto trading and services with a warm welcome.

In the final week of May 2021, The Malta Financial Services Authority (MFSA) granted “XCoins,” a country-based leading exchange provider,  the license to class 3 VFA (Virtual Financial Asset). 

The founder and CEO of XCoins, Rob Frye, stated that Xcoins is dominating the space of digital assets worldwide by standing as one of the earliest cryptocurrency platforms to reach this benchmark implies that they are completely capable of paving the path for an additionally secured and organized industry. 

This is another such authorization the Malta Financial Services Authority has consented to a crypto trade this year. The firstest crypto platform to obtain a VFA authorization of a similar degree was “Crypto.com.” By earning the milestone of receiving the license a couple of weeks before XCoins, the company called this achievement a historic moment for the cryptocurrency world.

Moreover, Crypto.com had previously made a plea to the MFSA to serve as a licensed financial institution, but the plea didn’t get approved. Again this year, the company has presented its plea to the Maltese authority; however, the regulator’s verdict is still not finalized. 

European countries like MFSA and Portugal are surpassing the crypto exchange milestone!

Conclusion 

Further, Criptoloja is currently seeking to bring Portuguese folk together who are interested in investing in crypto assets. However, the service provider company is not confident enough to start accounts in out-of-country trades. Nevertheless, investors say that the tremendous adoption of cryptocurrencies in Portugal is forming a new era of traders.

To get instant updates about Blockchain Technology and to learn more about online Blockchain Certifications, check out Blockchain Council. 

Portugal Grants First Crypto Exchanges Operating Licenses

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Shanghai Man: Economist says El Salvador ‘on road to death’, salaries paid in e-CNY …

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Our Man in Shanghai has refused to let recent regulations slow down the news coming from China. Enterprise blockchain, central bank digital currencies and start up projects continue to make a positive impact in a region hoping to grow economic value through technology.

Death march for El Salvador

The debate around El Salvador continued this week as media and officials tried to digest the adoption of Bitcoin as a national currency. JPMorgan stated that there was little economic benefit, and John Hopkins University professor Steve Hanke warned that the move could “completely collapse the economy” of the small nation. The former Bank of China deputy governor Wang Yongli took a very hardline approach, by stating that volatility and a lack of regulation or controls would put the economy on a “road to death.” This quote, appearing in state run media The Paper June 9, was an unusually direct and colorful statement on the issue.

Crypto innovation can be productive

Zhou Xiaoquan, a former governor of the People’s Bank of China, had a few positive things to say about cryptocurrency as a technology on June 11. He spoke at an economic summit in Shanghai and noted the cryptocurrency innovation in China can be productive when it serves the real economy. He also took some shots at other countries, stating that people would be mistaken if they thought other countries were taking the same approach towards building financial services. Zhou, who is one of the most often-quoted economists in the country, felt there was little emphasis on the relationship between financial services and economic value elsewhere in the world. Based on the wild displays at the Miami Bitcoin conference a few weeks ago, his position might be more sound than others would care to admit.

Paid in e-CNY

China’s e-CNY tests continued with the first reported mass payment of salaries in Xiong’an, a district near the capital Beijing. According to Cointelegraph, the pilot received support from a number of national banks and saw subcontractors paying workers their salaries from a digital wallet.

Industrial blockchain worth $22.6B

On June 3, a government organization issued a report entitled the China Industrial Blockchain Development Status and Trend Report. According to the report, in 2020, 222 industrial blockchain policies were issued, 12,059 new blockchain-related patent applications were approved, and 776 new blockchain enterprises were established. The report also claimed that the current market size of the industrial blockchain sector was around $22.6 billion U.S. dollars. Industrial blockchain is an area that China is eager to grab control in, leading to this explosive growth in recent years.

Only 5X the fun

Leading exchange Huobi surprised futures traders by limiting them to only 5x leverage on perpetual swaps and blocking new users from accessing the feature altogether. Futures trading, particularly highly-leveraged futures trading, had always been popular features on exchanges like OKEx and Huobi. It will be interesting to see whether these new decisions to limit risk will be damaging to these large exchanges that still somewhat adhere to regulator rules. It’s also possible that it’s a short-term solution in order to avoid scrutiny during periods of tighter control.

Futures of Singapore

While Huobi was tightening controls on futures traders, Singapore-based platform SynFutures was completing a Series A for $14 million. The round was led by Polychain Capital and included names like Framework Capital, Pantera Capital, Bybit, Kronos Research, WOO Ventures, Wintermute, and IOSG Ventures. SynFutures is creating a trustless derivatives market where users can take positions on assets or anything that has an accurate feed, including Bitcoin, the price of gold, or even the Bitcoin hashrate. What many people don’t know is that the SynFutures team is composed of members from Matrixport, a financial service app that was an offshoot of massive Chinese mining conglomerate Bitmain. Now you know the whole story!

This weekly roundup of news from Mainland China, Taiwan, and Hong Kong attempts to curate the industry’s most important news, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.

Shanghai Man: Economist says El Salvador \’on road to death\’, salaries paid in e-CNY …

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CABEI Lends assistance to EL Salvador for Bitcoin Adoption

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On Monday, 14th June, the head of the multinational development bank, CABEI (Central American Bank for Economic Integration), announced that the bank would provide technical assistance for the implementation of Bitcoin as legal tender in El Salvador.

In the Monday press conference, The executive President of the Central American Bank For Economic Integration, Dante Mossi, said the development bank is looking forward to collaborating with the finance ministry of EL Salvador for the selection of a technical team to carry out a successful bitcoin implementation process.

Mossi admitted at the Monday press conference that the Government of El Salvador was actively looking for assistance from the financial institution to allow a proper enactment of Bitcoin as a legal tender in the country. 

Mossi seemed pleased while delivering the message to EL Salvador’s government and the President that how proud he feels that the Central American Bank for Economic Integration came out to be the first choice of President Bukele and the Government authorities of El Salvador. Further, Mossi brought up the point that there is no other country in the world that has adopted Bitcoin cryptocurrency as widely as this country has done. He said, protecting public privacy is a big challenge today, and to overcome this, we must choose the most efficient method.

Mossi gave out some details about the formation of the technical advisory team of the bank that would involve CABEI members, the ministry of finance and central bank officials from EL Salvador. 

The development bank also aims at helping in project planning and providing navigation assistance regarding the legal aspects of Bitcoin implementation as the legal currency of El Salvador.

Challenges in Bitcoin Adoption 

Last week, El Salvador turned into the first country to receive Bitcoin as a legal tender after Congress authorized President Nayib Bukele’s recommendation to accept the cryptocurrency.

Early this month, after El Salvador collaborated with digital wallet company “Strike” to foster the country’s advanced financial framework utilizing Bitcoin technology, President Bukele presented the bill to Congress.

After a couple of days, El Salvador’s President Bukele reported that bitcoin mining would be carried out under the nation’s state-run geothermal energy utility by employing power produced from volcanoes. The declaration was made only a few hours later, the Central American country’s CongressCongress cast a ballot to make the crypto a plausible legal tender.

Still, the International Monetary Fund (IMF) cautioned El Salvador about the dangers of utilizing cryptocurrency for everyday exchanges. An IMF group planned to meet with the President of El Salvador as the worldwide association reflected upon another aid package for the country during its recuperation from the Covid-19 pandemic. 

Meanwhile, El Salvador’s President disclosed that he was in touch with the IMF and expressed that he would clarify the operations comprehensively and the situation with the economy regarding how the currency functions as a legal tender in the country.

Conclusion 

President Bukele promises a robust selection of experts from CABEI would be made for effective risk assessment, investment plan, financial education, and regulation. CABEI, on the other hand, seems to be equally invested.

CABEI Lends assistance to EL Salvador for Bitcoin Adoption

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US Financial Watchdogs Moving Towards Robust Regulatory Framework

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Financial watchdogs around the world have been making great efforts to identify loopholes in the crypto market, with the aim of developing a robust regulatory framework. The US authorities have also been brainstorming on the best strategies that can be adopted to protect investors and make the crypto sector safe for everyone.

The US Federal Reserve Chief, Jerome Powell, recently made remarks about how cryptocurrencies were posing a risk to financial stability. To curb this, more regulations needed to be implemented especially in the light of this year’s frenzied popularity of cryptocurrencies.

In addition, the US Treasury also expressed concerns about wealthy individuals turning to cryptocurrencies to avoid taxation. To address this, the Treasury has proposed that crypto exchange firms in the US report large transfers to the relevant regulators.

Speaking to the Financial Times this week Michael Hsu, the acting comptroller of the currency, said that he was hopefully expecting US officials from the various regulatory bodies to come together to create what he described as a “regulatory perimeter” for crypto.

Critical Time for Regulations

The regulatory proposals come at a time when Bitcoin is experiencing wild price movements. The currency lost nearly 50% of its value in May when the token crashed to almost $30,000 after hitting an ATH of $63,500 in April.

Jerome Powell relayed his concerns about cryptocurrencies and the threat they posed to financial stability. He also expressed guarded support in the Federal Reserve exploring the launch of its own digital fiat, that might mark a significant step in the US creating a central bank digital currency. Powell also expressed worry about how crypto innovations were risky to both investors and the entire financial sector.

The remarks by Powell show that the Federal Reserve has been looking at ways they can deal with the popularity of cryptocurrencies and their affect on traditional financial models. Creating a comprehensive framework for the crypto industry would lay the ground for launching the CBDC.

Bitcoin Chart 1 June

Not Actual Assets

The Federal Reserve and the Treasury have been considering how to regulate crypto for some time but have been moving slowly. Now they appear to be worrying that the industry could get too big for them to regulate properly unless they start to get serious.

The question of whether to regulate crypto is a different one to whether crypto has intrinsic value. However, even after the market cap of cryptocurrencies reached $2.6 trillion in May, the two agencies remain unconvinced that cryptocurrencies have a great value. The authorities still view the tokens as art, gold, and other assets solely used for speculation.

However, the Federal Reserve believes that a CBDC is a safer tool as a holder has a claim to the central bank, which is similar to paper currencies. Powell also stated that regulators would release a discussion paper within the summer talking about digital currencies as well as the benefits and risks that these tokens have. The relevant stakeholders would also seek public participation in the matter.

With the tough regulatory framework looming in the US crypto sector, it means that cryptocurrencies should be ready for substantial change, although there may be lengthy deliberations before the rules are definitively put in place. While the change may be difficult at first, it will ultimately be beneficial for the market in ending uncertainty and setting up clear rules of the road for all market and ecosystem participants.

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US Financial Watchdogs Moving Towards Robust Regulatory Framework

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