Coinbase Adds Crypto-to-Crypto Trading for Retail Customers

Coinbase users can begin trading cryptocurrencies directly with other cryptocurrencies, the exchange startup said Monday.

The company is adding support for crypto-to-crypto trading for its retail customers, adding a feature that has long been available to professional cryptocurrency trading services, said product manager Anna Marie Clifton. Users on Coinbase.com, as well as the Android and iOS apps, will be able to begin trading bitcoin pairs in the coming days through the new feature, called Coinbase Convert.

She told CoinDesk that while trading pairs are “a pretty common paradigm in the crypto trading space,” they are not currently being served well to the broader retail audience.

“The functionality is giving customers the ability to directly convert between one cryptocurrency and another, which is pretty advanced,” she said.

The trading pairs were developed based on user feedback, Clifton said.

Unlike professional trading services, which use such pairs to take advantage of price fluctuations, retail users are likely to use these pairs for more utilitarian purposes.

As one example, she said, some customers have purchased bitcoin but now want to interact with decentralized applications (dapps), and therefore need to convert their holdings.

“I think one of the things that was most surprising was seeing a lot of customers frustrated because they wanted to use the product immediately [but] it required two trading fees,” she said.

Initially, Coinbase Convert will support bitcoin trading pairs, with customers able to convert to bitcoin cash, ethereum, ethereum classic, litecoin and 0x. More pairs may be added in future based on customer feedback.

The exchange has been rolling out the functionality over the past week, with small groups seeing the new pairs last week. The feature will be “gradually” rolled out to each of the different countries Coinbase offers native payment access in.

“We’ll continue iterating on the product and expanding the functionality,” Clifton said. “An increasingly large number of customers will have this functionality available.”

Image via Shutterstock



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SeedCX Exchange Is Barring Employees from Crypto Trading

Having traded cryptocurrency with his own money since 2014, software engineer Alex Wachli made a difficult choice when he joined the institutional crypto startup Seed CX.

He had to give up trading.

Seed CX forbids cryptocurrency trading by its roughly 40 employees. So Walchli effectively locked up his crypto holdings by handing the compliance team a list of all his wallet addresses, so they could monitor them and confirm his holdings stayed put.

The engineer says he understands how personal investments could create a conflict of interest with regards to the customers he serves and the way his team evaluates support for various assets.

“I think everybody here is not here to try and pick and choose winners, and to let the market to decide,” Walchli told CoinDesk. “If we didn’t have these policies we might be biased and we might not be focusing on the right goals.”

Seed CX’s policy, quietly put into place last year, appears to be one of the industry’s strictest. Few exchange startups have employee trading policies comparable to those found in traditional capital markets, in part because crypto is still considered by some to be a Wild West industry without clear regulatory requirements.

“We don’t necessarily know what ‘material, non-public information’ [MNPI] means in a crypto context,” Justin Steffen, a litigation partner at Jenner & Block LLP, told CoinDesk, referring to the legal term for information that would give insiders an edge over the investing public. “That will be worked out by courts.”

In the securities markets, for example, an executive who trades stock knowing that the company is about to announce a merger or recall a defective product might be a straightforward case of illegal insider trading. But in crypto, where the assets are created with open-source software and network activity is visible to all on a blockchain, different types of news move the markets.

And sometimes the people working at crypto exchanges are privy to such information – including trading trends, technical issues related to liquidity, and decisions to list certain assets – before anyone else.

In traditional finance, “it’s rare for exchanges to have this much power to change the price of a token or asset that they list,” said Edward Woodford, co-founder of Seed CX, which has raised $25 million of venture capital and is courting instititonal investors as clients.

As such, Woodford said his company’s no-trading policy aims to foster trust among institutions that are used to established corporate norms beyond MNPI contracts, which state employees may not trade based on internal information that could move the broader market.

Speaking of rumors that some crypto exchanges trade against their customers or allow front-running, where employees make personal trades based on information general customers don’t have yet, Woodford told CoinDesk:

“We wanted to avoid any risk that these [frontrunning] allegations could be levied against us.”

Lay of the land

To put Seed CX’s employee trading ban in perspective, CoinDesk reached out to several other prominent crypto trading platforms about their policies.

A spokesperson for Binance, currently the world’s second-largest exchange by trading volume according to CoinMarketCap, said the Singapore-based company has “a strict policy in place banning insider trading, similar to that of investment banks,” but would not share further details.

In Silicon Valley, industry unicorn Coinbase’s chief legal officer Brian Brooks told CoinDesk his company’s current policy requires a small group of employees with decision-making power to self-report their holdings.

“For rank-and-file employees there is no reporting requirement. There is an MNPI prohibition,” Brooks said, referring to a contract employees must sign. “And you may be subject to certain blackout windows depending on whether we are about to list an asset and other kinds of things.”

Employees are also routinely recused from participating in decisions based on their personal holdings, he said.

A Coinbase spokesperson said this policy has been in place for “several years,” but would not be more specific. The company is fighting an ongoing class-action lawsuit alleging employees engaged in insider trading when the bitcoin network forked in 2017 to create the alternative currency bitcoin cash. Among other claims, the plaintiffs allege that insiders traded bitcoin cash at inflated prices while trading was closed for retail customers.

Coinbase isn’t the sole crypto platform with MNPI contracts. Wall Street veteran and AirSwap co-founder Michael Oved told CoinDesk that, in addition to MNPI restrictions, all employees require written approval from the legal team for trades over a certain amount, a value which Oved declined to specify.

Speaking to this point about clearing trades with an internal legal team, Steffen said MNPI policies may be insufficient without supervision. He added:

“Traditional financial institutions are actively making you report trades, transactions, and issues that may constitute insider trading. That is the norm. That is the standard. When I say ‘every trade you make and every real estate transaction you do has to go through compliance,’ that’s what I mean by supervision.”

Winds of change

Some legal experts believe courts and regulators will encourage exchanges to follow even stricter compliance standards, beyond self-reporting, in the near future.

Attorney Jeremy Deutsch, a partner at the Washington, D.C.-based law firm Anderson Kill, agreed with Steffen that the standard norm among banks and capital market exchanges is for legal experts to monitor or restrict all employee trading, and communications such as emails, and external business transactions like purchasing property.

Even beyond securities markets, Deutsch said professional fiat currency and commodities traders also have numerous restrictions related to their personal assets, adding that he sees no reason why the same should not hold true for crypto:

“What would the justification be to not apply the full scope of compliance obligations to those who are entrusted with early information on the market direction, or potentially the ability to move the markets themselves with their trading, just due to their privileged position?”

Looking forward to 2019, Deutsch said courts and regulators may specify that lower-ranking employees at exchange companies who deal with “the flow of information or orders” also require monitoring, and approvals for most significant financial activities, from the compliance department.

“Otherwise, you’re going to see a tremendous amount of private litigation,” Deutsch said.

Steffen agreed. Crypto markets, he said, involve “very fact-intensive situations” that require legal expertise because “there’s not uniformity among everyone about what is material, nonpublic information or a security.”

That’s why Woodford of Seed CX believes a no-trading policy benefits his employees as much as exchange users.

“An employee may not deem something material whereas we as a company would deem it as material,” Woodford said, concluding:

“It’s also about protecting [employees] as well.”

Edward Woodford image via SeedCX



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Major German Stock Exchange to Launch Crypto Trading Platform

Germany’s second-largest stock exchange, Boerse Stuttgart Group, is set to launch a cryptocurrency trading platform in the first half of 2019.

The firm announced Wednesday that it has partnered with a local fintech company solarisBank to create an engineering infrastructure for digital assets trading. solarisBank, which operates with a banking license in the country, will also be Boerse’s banking partner for the venture.

“With its combination of technology and banking expertise, solarisBank is a great partner for us to offer central services along the value chain for digital assets,” said Alexander Hoptner, CEO of Boerse Stuttgart.

Initially, trading for bitcoin and ether will be enabled on the platform, with support for other tokens expected once its initial coin offering (ICO) platform – also currently under development – goes live.

Both individual and institutional investors will be able to trade on Boerse Stuttgart’s crypto platform, which will offer features similar to its stock trading platform. This includes open order books and order execution in compliance with relevant laws.

Boerse Stuttgart is also seeking a regulatory approval to offer multilateral trading facility (MTF) for its crypto trading marketplace. MTF is a type of trading system that allows matching buyers and sellers of financial instruments using electronic systems.

The stock exchange first revealed its plans to launch platforms for crypto and ICO token trading platform in August of this year, as well as a trading app called Bison and custody services for cryptocurrencies. The trading app will be launched by Boerse’s subsidiary Sowa Labs and will offer fee-free trading at launch, the firm said at the time.

Just yesterday, SolarisBank also teamed up with a crypto payments startup Bitwala to help them offer crypto banking services in the country.

Boerse Stuttgart image via Shutterstock 



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Kraken Is Seeking ‘War Chest’ Investment at a $4 Billion Valuation

Crypto exchange Kraken is on a fundraising drive, offering “select” investors a chance to purchase stakes in the firm.

CEO Jesse Powell confirmed to CoinDesk that his company is looking to tap a small number of clients for a fundraising round valuing the firm at $4 billion.

“There is presently a limited time opportunity available to a very small, select number of clients to purchase Kraken shares” at a $4 billion valuation with a $100,000 minimum, he told CoinDesk via email.

The general public will not have access to these shares, and the exchange is not looking to make a public offering.

The company has not so far determined how much it will look to raise, and any final number will depend on the amount of interest, Powell said. He added that “the amount of shares available is relatively limited,” and the exchange will close its offer on Dec. 16.

An email sent to investors describes the move as “presenting our most valued clients with the opportunity to become equity holders in the company,” going on to say:

“We’re profitable and sitting on significant reserves so fundraising is not a necessity, however, further aligning interests with our top clients while building a war chest for acquisitions in the bear market presents a win-win opportunity.”

Asked what types of acquisitions Kraken might make, Powell pointed at the exchange’s previous purchases of Coinsetter, CAVirtex, CleverCoin and Cryptowatch.

“We’d be looking for more along those lines, anything that would have strong synergies with our existing product/service offerings, and with great teams,” he explained.

While he could not speak to any specific acquisitions at press time, he said the exchange’s venture arm “has been very active in the last year,” and may make some announcements at the beginning of 2019.

The exchange will use the services of an undisclosed third party to verify that interested parties are accredited investors in the U.S., as well as oversee the actual transactions.

Kraken joins its fellow U.S. exchange Coinbase in raising funds during the bear market. The latter raised $300 million earlier this year, with an $8 billion valuation.

Like Kraken, Coinbase said it was building a “war chest,” with vice president of corporate and business development Emilie Choi saying the funds would be saved for a “rainy day.” Unlike Kraken, though, Coinbase is not looking at any specific acquisitions or other moves at this time, Choi said.

Jesse Powell image via CoinDesk Consensus archive



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Gemini Launches New Mobile App for Crypto Traders

Crypto exchange Gemini has just launched a mobile wallet for its users.

Gemini CEO and co-founder Tyler Winklevoss wrote in a Medium post on Tuesday that the new app allows customers to buy or sell cryptocurrencies, view market prices, see their own portfolio values and set price alerts, among other features geared toward traders.

The exchange is working to “build the future of money” through its licensed exchange and regulated custodian, Winklevoss wrote, ensuring that customers can entrust their holdings to a compliant platform.

“A trusted and regulated platform, however, is just the beginning. The future of money is both digital and mobile, and now Gemini is too with the launch of the Gemini Mobile App,” he added.

As such, the app features Gemini’s institutional-grade security, while remaining easy to use, he claimed.

Among the offerings is Gemini’s basket, dubbed the Cryptoverse, which allows customers to simultaneously purchase all of the coins currently offered by the exchange – bitcoin, ether, bitcoin cash, zcash and litecoin – at once.

The coins are weighted by market capitalization, according to the post.

Gemini added bitcoin cash just days ago, after securing approval from the New York Department of Financial Services.

“We spent the last three years building the world’s most trusted cryptocurrency platform and today we are excited to extend it into your hands and allow you to engage with cryptocurrency wherever you are and whenever you want,” Winklevoss wrote Tuesday.

Image Credit: Piotr Swat / Shutterstock.com



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Crypto Assets on Gibraltar Blockchain Exchange Can Now Be Insured

The Gibraltar Blockchain Exchange (GBX), a subsidiary of the island’s stock exchange, is now providing insurance coverage for crypto assets listed on its platform.

The firm announced Monday that it has partnered with a local provider called Callaghan Insurance to provide the policy to cover both hot (online) and cold (offline) wallets listed on the GBX Digital Asset Exchange.

“This represents an important step in attracting users who require strict assurances around the security of their assets,” said GBX CEO Nick Cowan.

The news follows last month’s news that GBX had received a license from the Gibraltar Financial Services Commission (GFSC) under the jurisdiction’s new regulatory framework for distributed ledger technology (DLT).

GBX is not the only crypto exchange to offer insurance for digital assets. Back in October, Gemini Trust Company, an exchange co-founded by Cameron and Tyler Winklevoss, announced it would offer protection for digital assets through a consortium of insurers arranged by global professional services firm Aon.

Centuries-old insurance marketplace Lloyd’s of London is also underwriting cover against the theft of cryptocurrencies as announced in August by Kingdom Trust, a qualified custodian of around 30 cryptocurrencies and tokens at the time.

The crypto insurance market is estimated to be worth around $6 billion, but, as reported, that level of coverage is thought to be insufficient considering the top three exchanges each handle more than $1 billion of trades a day. Notably, crypto exchange unicorn Coinbase already has the lion’s share of the available coverage, leaving very little for the rest of the industry.

Umbrella image via Shutterstock 



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Crypto Trading Platform ErisX Hires Serial Exchange Founder Matt Trudeau

ErisX is beefing up its leadership ahead of the launch of cryptocurrency spot and futures trading early next year.

Revealed exclusively to CoinDesk, the digital asset trading platform has hired markets and exchanges veteran Matt Trudeau as chief strategy officer. The news comes a week after ErisX closed a Series B funding round that raised $27.5 million from firms such as Bitmain, ConsenSys, Fidelity Investments, Nasdaq Ventures and Monex Group.

Trudeau started his trading career in the early 2000s when the U.S. equities market was going digital and has overseen some 10 global market launches including Instinet, Chi-X, IEX and most recently Tradewind, where he looked specifically at how to tokenize and trade precious metals.

Outside of crypto and financial circles, he is best known as one of the heroes of Michael Lewis’ bestseller “Flash Boys,” which tells the story of IEX, a stock exchange founded to promote fairer markets by creating speed bumps for high-frequency trading. 

“I have seen first hand the difference between market revolutions and more incremental evolutions,” Trudeau told CoinDesk. “Clearly, crypto markets were a bit of revolution at the outset and now it feels more like we are at a stage where it needs to be more evolutionary.”

In his new role, Trudeau is tasked with thinking about the long term, beyond the current bear market conditions in crypto.

“There is the tactical trading aspects of what’s going on in the market right now. But you need to take the long view. Some of best internet businesses were started after the dotcom crash,” he said.

Thomas Chippas, CEO of ErisX, agreed and added:

“Would it be better if the price of crypto were generally going up? Of course it would. But stocks have been volatile recently too, if we were talking about equities and a stock exchange, nobody is going to say, ‘are you going to open your doors tomorrow?’”

Futures and spot markets

Backed by a range of large trading firms such as DRW and TD Ameritrade, as well as crypto specialists such as ConsenSys, ErisX aims to launch spot trading in bitcoin, bitcoin cash, litecoin, and ethereum by Q2 2019. Futures contracts in bitcoin (and possibly other coins) will follow shortly after, subject to approval by the Commodity Futures Trading Commission.

Unlike the bitcoin futures that the Chicago Mercantile Exchange and Chicago Board Options Exchange (also a backer of ErisX) have been offering for almost a year now, ErisX’s contracts will be settled in actual bitcoin, rather than in cash.

But ErisX won’t be alone in listing so-called physically settled contracts, as New York Stock Exchange parent ICE is poised to offer one-day physically settled bitcoin futures on its Bakkt platform in January.

As far as futures in other coins appearing on the platform, Chippas said: “Everything here is going to be subject to approval. But we are working with the commission [CFTC] during our application phase here and will say more about which products would launch thereafter.”

Like many other firms building institutional-grade crypto offerings, ErisX is in the process of securing a range of regulatory licenses. It is in the process of gaining a Derivatives Clearing Organization (DCO) license from the CFTC, while on the spot side, the team has been gathering state-based money transmitter licenses.

“You have to go state by state and the laws are slightly different in each state, so you have to make a state-level application. We already have a substantial number and we have others in flight,” said Chippas.

Trudeau added that what ErisX is doing with the spot market and futures fits more neatly into some of the pre-existing constructs, as opposed to things like alternative trading system (ATS) licenses from the Securities and Exchange Commission (SEC) for crypto firms.

“If you are introducing something regulators haven’t had an opportunity to really look at and study, they are going to take their time and learn,” said Trudeau, with regard to the SEC. “I think with what we are seeing in the market with ATS’s and securities tokens is that some of those things are less crisply defined at this point so they require a bit more study.”

Matt Trudeau image via LendIt Conference/YouTube



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Crypto Exchange Gemini to List Bitcoin Cash With NYDFS Approval

The Winklevoss-owned Gemini crypto exchange is adding support for bitcoin cash (BCH), the firm announced Friday.

Specifically, the New York-based startup is only supporting the fork of bitcoin cash based on the Bitcoin ABC roadmap, and not the alternative version, “Satoshi’s Vision” (SV). The difference arises after a controversial hard fork last month when the bitcoin cash network split into two different and competing blockchains with their own tokens.

The exchange has added replay protection to ensure that transactions are only valid on the one network, wrote engineering VP Eric Winer.

“Any cryptocurrency sent to Gemini over a blockchain that we do not support, such as Bitcoin SV (BSV), will be invalid and irrecoverable,” he said, adding:

“We are continuing to evaluate Bitcoin SV over the coming weeks or months, and we may or may not choose to support withdrawals and/or trading of Bitcoin SV in the future.”

Gemini added that the New York State Department of Financial Services (NYDFS) has approved the bitcoin cash listing, allowing the exchange to offer both trading and custody services to its customers in the state. The agency had not yet made an announcement regarding its approval at press time.

Starting Saturday at 14:30 UTC, customers will be able to begin depositing bitcoin cash into their accounts, with trading support starting on Monday at 18:00 UTC. At launch, the exchange is offering BCH trading pairs with U.S. dollars, bitcoin, ether, litecoin and zcash.

It joins a number of other exchanges in listing bitcoin cash ABC as bitcoin cash, including Kraken and Coinbase, while Poloniex still lists ABC and SV as separate coins.

Gemini first announced it was looking into adding bitcoin cash in March, prior to the hard fork. At the time, founders Cameron and Tyler Winklevoss also cited litecoin as a potential addition. The latter coin was officially listed in October.

Cameron and Tyler Winklevoss image via JStone / Shutterstock



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Coinbase Considers Adding 30 New Crypto Assets to Its Exchange

After adding support for several new tokens over the past months, Coinbase has revealed more than 30 crypto assets it is considering for listing.

However, the San-Francisco-based exchange is not adding the 31 tokens to its platform just yet, but rather, is “continuing to explore the addition” of the assets, according to a blog post published Friday. The tokens included in the list range from ERC-20 tokens to independent projects.

“Over time, we intend to offer our customers access to greater than 90 percent of all compliant digital assets by market cap,” the post said.

There are some caveats however. The post explained that the process to add new tokens requires “significant exploratory work” on both technical and legal compliance aspects, and the firm cannot guarantee that all the named tokens will actually be added.

The post went on to say:

“Furthermore, our listing process may result in some of these assets being listed solely for customers to buy and sell, without the ability to send or receive using a local wallet. Finally, as per our listing process, we will add new assets on a jurisdiction-by-jurisdiction basis, which allows us to add assets efficiently and responsibly.”

The exchange warned its customers that some may see assets appear on public-facing APIs and other services before they are officially listed, but should that happen, Coinbase “cannot commit to when or whether these assets will become available.”

Brian Armstrong onstage at Techcrunch Disrupt London in 2014



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Binance Launches Multi-Account Feature for Institutional Crypto Traders

Crypto exchange Binance is looking to aid institutional investors with a new sub-account feature.

Announced Thursday, these sub-accounts will allow institutions to set up multiple trading accounts for each firm, with different accounts being given different levels of access and control. The firms’ main accounts will be able to control these sub-accounts, granting them permissions as needed.

A single institution may have up to 200 sub-accounts, according to the exchange.

In addition to the different levels of account types, Binance will allow different sub-accounts to transfer funds with no fees and unique API limits per sub-account, meaning they will be able to trade at a greater capacity than they might otherwise be able to do.

While sub-accounts will be able to oversee their own trades, create and edit their own API keys and place their own orders, the main accounts will be able to view all data, transfer funds between accounts and cancel any and all orders placed.

The new sub-account system will be based on Binance’s existing institutional account structure, with any institutions tagged as Tier 3 or above able to set up these accounts.

According to a previous blog post, this means accounts with a minimum BNB balance of 1,000 and at least 4,500 bitcoin in trading volume over the previous 30 days will be eligible.

Binance joins a number of other crypto firms in looking to institutional traders as clients. In the U.S., security firm BitGo has been growing its trust and custody division, hiring a veteran banker as CEO of the new wing.

Similarly, crypto exchange Poloniex just launched its own trading services aimed at institutional investors, offering similar API services, though it did not list any similar sub-account feature.

Coinbase has likewise been looking to increasing traffic from institutional investors with its new over-the-counter trading desk. While the desk is still being tested, the exchange plans to take it live in the coming weeks.

Binance image via Grey82 / Shutterstock



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