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Citigroup Launches Crypto Trading and Custody Services

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Citigroup, a banking giant, is launching a crypto trading and custody service. The new service aims to meet the growing demand for crypto assets.

Itay Tuchman, the global head of forex for Citigroup, has confirmed that the bank had witnessed a rapid accumulation in Bitcoin (BTC) interest from institutional clients. Tuchman announced the move in a report published in Financial Times.

According to Tuchman, banks could venture into crypto through proprietary trading, where they use their resources to make profits. “There are different options from our perspective, and we are considering where we can to best service clients. This is not going to be a prop-trading effort,” said Tuchman.

Not happening any time soon

However, Citigroup has confirmed that it is taking its time to launch crypto services. Tuchman stated that the bank would only jump into the crypto space when it was sure that its clients could benefit. It would also consult with regulators to build something robust and compliant.

“I don’t have any FOMO [fear of missing out] because I believe that crypto is here to stay and that we are just at the very beginning of the market. This isn’t a space race. There is room for more than just one flag.” Tuchman said.

In March this year, the bank released a report saying that Bitcoin could become a global trading currency after evolving. The report indicated that people’s perceptions about Bitcoin were changing. This would create a new opportunity and make the token more mainstream.

Citigroup Launch Crypto Trading and Custody Services
BTC/USD 1 day chart, Binance, 7 May 2021. Courtesy TradingView

Citi’s interest in Bitcoin

Citigroup analysts have written a paper on Bitcoin titled, “Bitcoin: At the Tipping Point’. The report indicated that BTC would change from a nascent form of payment to a store of value. Also, if there’s a boost in Bitcoin’s global reach, the crypto asset could easily become an international currency. This can be achieved through Bitcoin’s attributes such as decentralisation and borderless design.

Citi’s report on the currency shows that BTC may come in handy to exporters and importers. It would simplify international trading and may even be preferred to fiat currencies. Bitcoin lacks forex risk exposure. It is also fast, traceable, and guarantees the security of online payments.

Citigroup is not the only Wall Street bank to venture into the crypto space. Top banking institutions that have ventured into crypto include Bank of New York, Goldman Sachs, Mellon, and Morgan Stanley. This latest move comes amidst increased retail and institutional demand for crypto assets.

Citigroup Launches Crypto Trading and Custody Services

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Where to buy Gold-Backed Cryptocurrencies in 2021

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If you want to get involved in the gold-backed cryptocurrency space, you’re probably debating on where the best place to buy them is. Fortunately, we’ve got you covered. In this guide, we’ll go over the best places to buy such assets.

Gold Backed Crypto Exchange

A gold-backed crypto exchange is pretty much the best place to invest in such assets. For one, these are the platforms that generate stablecoins. They offer the most value for your investment, often providing quality-of-life trading features and wallets for storage. Some also enable you to invest anonymously.

Not only this, but these exchanges often allow you to redeem your digital gold for physical bullion. Of course, you may have to reveal your identity for this, so they can provide it to the right person.

Such platforms generally audit their holdings and make the results publicly available for trust’s sake. Some are even available 24/7 for the ultimate ability to check their legitimacy.

Specific exchanges allow you to invest in fractional amounts of gold, too, increasing the asset’s accessibility. You can put in as little or as much as you’d like – an option not possible on traditional exchanges.

Binance

Binance is the largest cryptocurrency exchange in the world regarding market cap. It offers support for thousands of cryptocurrencies, many of which being gold-backed stablecoins.

On Binance, you can fund your account with a bank or other crypto and convert nearly any asset into a stablecoin. It’s all up to you, assuming the asset is listed. The platform offers various trading features as well, making it ideal for both beginner and expert traders.

If you’re a big investor, you can earn BNB, the platform’s stablecoin, which helps cover some trading fees. Saving you money, a dedicated stablecoin works wonders for many traders.

If you’re interested in branching off from stablecoins, Binance has tons of detailed documentation on the crypto industry for you to consume. Finally, this exchange has a wallet for you to store your assets within as well. While Binance isn’t a dedicated gold-backed cryptocurrency exchange, it’s definitely a decent alternative.

Coinbase

Based in San Francisco, Coinbase is a popular mainstream cryptocurrency exchange. Because of this, it’s much more selective in its offerings. Still, the underlying support makes it a great space to buy gold backed cryptocurrencies.

Like Binance, Coinbase has a wallet for online storage. It also contains a ton of documentation for learning about stablecoins and other crypto industry staples. If you live in the UK, there’s even a physical debit card, Coinbase Card, for spending on the go.

Beginner traders have more than enough features to make an educated purchase. However, if you’ve been in the space for a while, Coinbase has a pro exchange with more information than Binance. Just note that Coinbase has more expensive trading fees than most other exchanges. It’s a reliable platform, however, which is what you’re paying for.

Gemini

Gemini is a cryptocurrency exchange founded by the Winklevoss Twins of Facebook fame. The project is regulated by the New York Department of Financial Services. It’s often undergoing bank exams and audits as well. These regulations make it a great platform for trading gold-backed cryptocurrencies.

They’re the first crypto platform to hold the SOC 1 Type 2 and SOC 2 Type 2 compliance certificates as well. Gemini even offers hardware keys and insurance coverage for all assets stored on the platform.

Gemini offers various products such as its mobile app, a custody platform, an earn space, and even its own stablecoin. That stablecoin, the Gemini Dollar, is tied to the value of USD. It can be used to trade with gold-backed stablecoins, among other assets, similar to Binance’s BNB asset.

Otherwise, signing up on Gemini is relatively easy, though it does require you to verify your identity, among other things. If you’re looking for anonymity, this isn’t the platform for you. It does list a fair amount of gold-backed cryptocurrencies, however.

Finally, just like Binance and Coinbase, Gemini has its own offering of learning documents to educate yourself further on the cryptocurrency industry.

Where to buy Gold-Backed Cryptocurrencies in 2021

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Crypto-collateralized loans may soon bring new investors to space

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Institutional investors will soon be able to receive Bitcoin-collateralized U.S. dollar loans through Silvergate Capital Corporation — the holding company of pro-crypto institution, Silvergate Bank.

According to an announcement from Silvergate, Coinbase Custody will be the custodian for loans funded through the bank’s Silvergate Exchange Network, or SEN. The network will provide access to capital through U.S. dollar loans collateralized by Bitcoin (BTC) while Coinbase holds the crypto in cold storage.

“Traditional lending services generally do not exist in the digital currency industry, which means there aren’t many lenders for investors to choose from,” said Jon Melton, Silvergate director of digital asset lending. “Our relationship with Coinbase Custody offers institutional investors increased access to capital efficiency so they can take advantage of market opportunities in the digital currency industry.”

Silvergate will offer loans starting at $5 million with an initial 12-month term. Such loans could augment or replace traditional funding rounds for firms looking to enter the crypto space.

Since first announcing it would explore offering crypto-collateralized loans in 2019, Silvergate’s annual revenue has more than tripled, from $30 million to $91.5 million. The bank said at the time that its clients had significant interest for Silvergate “to be involved in the custody and transfer of digital assets between customers.”

In the fourth quarter of 2020, CEO Alan Lane said the bank would be expecting “increased demand” for these loans in 2021. Though the number of digital currency deposits grew by $2.9 billion over the same period, the price of Silvergate Capital Corporation stock has been volatile in the first quarter of 2021, reaching an all-time high of $176.27 on Feb. 16 but falling 40% within three weeks. At the time of publication, NYSE:SI is valued at $148.90.

Crypto-collateralized loans may soon bring new investors to space

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Deutsche Bank Calls for Crypto Regulation, Says Bitcoin is ‘Too Big To Ignore’ 

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Bitcoin’s increasing market capitalization has caused Deutsche Bank to list it as an important asset that is too important to ignore. The premier cryptocurrency has gained more than 1000% since falling below the $4,000 mark in March 2020. It is currently trading close to the $60,000 mark and has a market cap above $1 trillion.

Deutsche Bank’s Stance On Bitcoin

In a report released by the global banking giant, the Deutsche Bank analysts suggested that the Bitcoin price could continue to rise further as long as asset managers and companies continue to enter the market. 

The 18-page report titled “The Future of Payments: Series 2 Part III Bitcoins: Can the Tinkerbell Effect Become a Self-Fulfilling Prophecy?” discussed Bitcoin in its entirety. It also analyzed the key drivers of its historical price growth to a $1 trillion asset.

Deutsche Bank expects governments to start regulating Bitcoin by the end of 2021. The bank stated that Bitcoin had become such an integral asset that central banks and governments now understand the need to start regulating Bitcoins and other cryptocurrencies.

Deutsche Bank is convinced that Bitcoin will remain volatile due to its limited tradeability and liquidity. Although Bitcoin was created to serve as a medium of exchange, it has become more of a speculativce asset in recent years.

According to the researcheres, less than 30% of transactional activity in Bitcoin is related to payments. Therefore, implying that most people hold cryptocurrency as an asset.

Deutsche Bank Custody Plans

Deutsche Bank is not ready to be left behind as it joins banks exploring digital assets or virtual currencies.

In December, the bank announced its plans to develop a fully integrated custody platform designed to cater to institutional clients and their digital assets.

The German lender’s plans were included in a report published by the World Economic Forum. The report indicated that Deutsche bank aims to achieve the milestone by partnering with brokerages and top crypto exchanges worldwide.

The bank also disclosed its plans to create a trading and token issuance platform, bridging digital assets with traditional banking services, and managing the array of digital assets and fiat holdings in one easy-to-use platform.

Bank of New York Mellon, the world’s largest custodian bank, has also announced its entry into the custody market. Last month, BNY Mellon said it would roll out a new digital custody unit later this year to help clients deal in digital assets, including cryptocurrencies.

Meanwhile, Deutsche Bank’s previous survey released in January revealed that Bitcoin and U.S. tech stocks are viewed by investors as the biggest market bubbles right now.

The survey was based on responses from 627 market professionals between Jan. 13-15.

Deutsche Bank Calls for Crypto Regulation, Says Bitcoin is ‘Too Big To Ignore’ 

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JPMorgan’s Career Pages Brings Up Blockchain Job Positions

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According to the latest announcement, JPMorgan’s career pages post several jobs for Blockchain enthusiasts.

It was noted that it bought 56 open positions, with 34 including the tech in the job title.

Last year, JPMorgan continued on a Blockchain rampage by bringing multiple jobs to the industry. At that time, Indeed.com reported JPMorgan Chase as the only financial firm in the top 10 companies posting jobs related to Blockchain, cryptocurrency, and Bitcoin. 

The report mentions that most job openings posted this year are spread across the U.S., India, and Singapore, indicating that technology holds a futuristic career all across the globe. Talking about job openings, many of the jobs relate to Onyx, the division created to oversee JPM Coin, the bank’s wholesale payments token. 

JPMorgan is a U.S. multinational investment bank and financial services holding company headquartered in New York, serving corporations and individuals in more than 100 countries.

JPMorgan is Continuing on a Blockchain Rampage

As U.S. mega-bank JPMorgan posted about Blockchain job positions, the report mentions that most Blockchain engineer roles are focused on integrating JPM Coin and Liink into JPMorgan’s payments architecture.

Last year in October, JPMorgan rebranded the Liink banking network, which is based on a fork of Ethereum. At the time of rebranding, it was noted that Liink invites its 400-plus financial institutions to start building on top of the platform. 

Apart from JPMorgan, several other big banks are making a lot of noise in the cryptocurrency space, focussing on areas such as crypto custody and potentially trading digital assets. Reports also highlight that in contrast to JPMorgan’s career page, Goldman Sachs and Morgan Stanley have only two blockchain job openings, whereas NY Mellon has four job positions. 

Specifically talking about JPMorgan jobs, the report mentions that 13 jobs related to Onyx and Link, majorly based in the U.S. Apart from this, there are also active positions for a marketing manager for Liink and blockchain adjacent positions in commercial real estate, the report reads.

As the bank sees blockchain technology as a viable solution, recently, it was announced that JP Morgan had tested a transaction of Blockchain in space. It was further noted that the Blockchain transaction testing was carried out by a Danish space firm named GomSpace’s satellites.

Blockchain space is booming, if you are interested in mastering the core concepts of Blockchain and becoming a Certified Blockchain Expert, you can get enrolled to Blockchain Council. 

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

JPMorgan’s Career Pages Brings Up Blockchain Job Positions

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Searching deep: The quest for Bitcoin scalability through layer two protocols

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As the largest cryptocurrency by market capitalization, Bitcoin’s (BTC) effectiveness as a medium of exchange is still a matter for debate. Unlike fiat money that is inherently infinite in supply and must be managed by a central bank, Bitcoin is akin to gold in that it is commodity money with a finite supply of 21 million.

However, the supply cap is not the major stumbling block for BTC as a medium of exchange, but rather, the transaction throughput. While Satoshi Nakamoto envisioned Bitcoin as a peer-to-peer electronic cash system capable of facilitating online payments without a central counterparty, seven transactions per second on average is hardly the standard for scalability.

Indeed, scalability is only one of three major metrics required for any currency system to succeed as a medium of exchange along with adoption and liquidity. There is an argument to be made of Bitcoin’s growing adoption around the world across several strata of the global economy.

Price volatility that has seen Bitcoin peak at $58,000 and then briefly fall below the $30,000 mark within the first two months of 2021 likely indicates lingering issues with liquidity. However, it’s important to note that the current period is being characterized by a bullish advance that began in October 2020. Ultimately, some analysts expect Bitcoin’s volatility to level out as more institutions take up positions in the market.

What do the critics say?

Bitcoin’s scalability problem is even older than the network itself. Indeed, upon first proposing the system back in 2008, James A. Donald replied to Satoshi Nakamoto with: “The way I understand your proposal, it does not seem to scale to the required size.”

This astute observation has been at the heart of some of the more contentious and controversial debates within the Bitcoin ecosystem. Disagreements over how to solve the problem have even resulted in multiple hard forks.

These days, when Bitcoin critics cannot definitively dismiss BTC’s store of value proposition, scalability seems to be a low-hanging fruit with which to craft some anti-Bitcoin soundbite. Speaking during the 2021 Daily Journal annual shareholders meeting, Berkshire Hathaway vice-chairman Charlie Munger remarked that Bitcoin will never become a global medium of exchange due to its price volatility.

The 97-year-old billionaire investor is no stranger to espousing anti-Bitcoin sentiments. Indeed, together with Warren Buffett, the two Berkshire Hathaway chiefs have been responsible for some of the more colorful negative remarks among Bitcoin. From being “rat poison squared” to “trading turds,” Munger once slammed BTC investors for celebrating the life and work of Judas Iscariot.

Munger, like Buffett, is among a class of Wall Street Bitcoin critics who have often claimed that Bitcoin has no intrinsic value. However, with the price of BTC continuing its relentless upward advance over the past decade while attracting significant institutional interest, detractors now seem to be left with only the scalability argument.

Even among mainstream crypto adopters, Bitcoin’s inability to scale at the base protocol level also seems to be a significant issue. In an address during the Future of Money conference back in February, Mastercard executive vice chair Ann Cairns declared that BTC was not suited to its crypto payment plans.

According to Cairns: “Bitcoin does not behave like a payment instrument […] It’s too volatile and it takes too long to transact.” As previously reported by Cointelegraph, Mastercard recently announced plans to offer support for cryptocurrency payment on its network.

Lightning Network node count rises, but slowly

Together with the 10-minute block creation time, the one-megabyte block size acts as the actual transaction throughput constraint for the Bitcoin network. The block size debate of 2017 that ultimately led to the Bitcoin Cash hard fork proved the adamance of Bitcoin purists to the 1MB block size ethos.

With the “big blockers” now firmly on their own Bitcoin forks like BCH and Bitcoin SV, the question of how to get BTC to scale without changing a thing on the protocol level still lingers. From Bitcoin banks to sidechain protocols, and even deferred settlement infrastructure layers like the Lightning Network, several developmental projects are currently ongoing to make Bitcoin more suitable for microtransactions like paying for coffee.

At a high level, these scaling solutions involve the creation of trustless, centralized (pardon the oxymoron) entities or layer-two networks that maintain lightweight versions of the BTC ledger to handle the actual “coin” transfers without having to maintain the full Bitcoin ledger. These sidechain implementations then transmit the transaction data for final settlement on the actual Bitcoin network.

LN is one of the major Bitcoin scaling solutions under active development by several organizations including Blockstream and Elizabeth Stark’s Lightning Labs. The Lightning Network is perhaps the most popular of the “defer-reconcile” scaling implementations that allow users to create payment channels that offer instant coin transfers at minimal fees.

According to data from LN data aggregator 1ML, there are over 17,300 public Lightning Network nodes and more than 38,400 channels. LN capacity is currently north of 1,100 BTC.

While LN adoption is yet to attain significant heights, layer-two implementation might be about to get a boost with Zap — a Visa-backed Lightning Network payments startup. In February, the company launched Strike — a payments and remittance app that utilizes the Lightning Network for payments.

Strike has also partnered with crypto exchange platform Bittrex to deliver LN-powered payments to over 200 countries around the world. The company plans to issue Strike Visa cards to users in the United States as well as in Europe and the United Kingdom before the end of the year.

What about Statechains?

There is a school of thought that argues Bitcoin scalability is only possible via layer-two solutions. Ruben Somsen, Bitcoin developer, crypto podcaster and founder of the Seoul Bitcoin meetup, is one of the proponents of this argument.

Somsen is an advocate of Statechains, another layer-two implementation but with a twist — transaction participants send private keys instead of actual unspent transaction output, or UTXO. The process involves loading a Statechain-compatible wallet with the exact BTC sum required for the trade followed by the transfer of the private keys from the sender to the recipient.

Since transferring private keys across the blockchain is fee-less and instant, the Statechain idea seems to have gained some traction within the Bitcoin scalability discussion. However, revealing private keys comes with significant security implications.

Thus, in recent times, the Statechain concept has been modified to include a third entity that acts as an intermediary between the transacting parties. Detailing the workings of this counterparty federation within the Statechain matrix, Somsen told Cointelegraph:

“Statechains allow you to take your coins off-chain (meaning cheap transactions) in a way that puts a minimum amount of trust in others. You have to trust a federation, but the federation won’t know that they are getting partial control of your coins, and they can’t refuse peg-outs (moving back to the Bitcoin blockchain).”

Blockchain infrastructure firm CommerceBlock is one of the companies actively developing Statechains as a viable scalability solution for Bitcoin. The firm is credited with introducing the counterparty federation or “Statechain entity” to improve the security of the system. In a conversation with Cointelegraph, CommerceBlock CEO Nicholas Gregory outlined how Statechains operate:

“At a high level, Statechains are simply a way to transfer your private key to another user. To facilitate this, you have to cooperate with a Statechain entity. However, at all times, the user has full control of their funds; at any anytime, they can withdraw their Bitcoin to their own custody. Therefore, the transfer is instant and private.”

While Statechains is a scalability solution on its own, some proponents agree that the system could integrate with the Lightning Network. With Statechains operating on the UTXO level, it is theoretically possible for another layer-two protocol such as the Lightning Network to be implemented on top of Statechains.

Such a hybrid integration could solve the limited node capacity issue of Lightning Network while ensuring the ability to facilitate multiple microtransactions via Statechains. Since the exact transaction amount is loaded into Statechain wallets, it’s impossible to split UTXOs making Statechain in its present iteration unsuitable for microtransactions.

According to Somsen, the Statechains can operate independently as well as function together with the Lightning Network: “Statechains complement the Lightning Network perfectly because opening and closing channels can happen off-chain. This removes a lot of the friction that exists in the current Lightning Network design.”

For Gregory, integrating Statechains with the Lightning Network is among the future developmental plans for CommerceBlock: “Statechains are instant and do not require liquidity lock up; however, you are sending the private key, so you can’t do small or specific denominations. This is where LN excels.”

With these developments and more, the quest for a workable Bitcoin scalability solution is still ongoing. While critics, like Munger, who have been consistently wrong about BTC, continue to drop soundbites, developers are hard at work to solve one of the longest-running operability issues concerning Bitcoin.

Searching deep: The quest for Bitcoin scalability through layer two protocols

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