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2019 is the Year of Stablecoins – 1

Another day, and another currency-pegged stablecoin project is making progress. Japan’s Digital Garage’s subsidiary Crypto Garage is launching a testing platform called SettleNet to test issuing a yen-pegged stablecoin. The pilot project involves Blockstream’s Liquid, which is a second layer on the Bitcoin protocol for fast settlement of Bitcoin trades, to act as a counterparty for the stablecoin trades. This is the second yen-pegged stablecoin project that is currently under development. Internet giant GMO’s stablecoin project is also expected to come out in the current fiscal year. After a proliferation of USD-pegged stablecoins last year, we are witnessing stablecoin fervour spread to the far east Asia as well. In addition to the above two Japanese stablecoin projects, other prominent South East Asian stablecoin projects include Korea-based KRwb project (Won-pegged stablecoin) and Terra.

While we are on the topic of stablecoins, we strongly recommend that you check out our headline article on CBDCs and stablecoins, and the key role they play in emerging geopolitics on Factor Daily, a leading technology news and analysis website.

The current landscape of stablecoins mirrors the pre-Ethereum era of cryptocurrencies, where virtually every currency back then was a Bitcoin clone. Most of these died out as a natural outcome of market consolidation. For example, if you look at the top 10 cryptocurrencies from five years ago, only two or three currencies, besides bitcoin, have managed to retain their positions, while the rest have perished, with the market eventually realizing that they have no real use case and offer no differentiated value proposition.

There is some merit to the idea of having price-stable cryptocurrencies which are potentially immune to the extreme volatility swings of regular cryptos. From an adoption standpoint, this will bring more users into the fold. However, the pace at which new projects are mushrooming is clearly unsustainable and all the value captured will converge toward a handful of names (projects with the best price stability mechanism(s) and sufficient decentralization).  

Meanwhile in Crypto Wonderland….

“Swiss PB Offers Crypto Banking with Fiat Ramps” Switzerland-based Falcon Private Bank has introduced support for direct transfers and storage of select cryptocurrencies. The bank announced that both private and institutional investors can now directly transfer a selection of major cryptocurrencies to and from the institution’s own “segregated Falcon wallets,” as well as convert crypto into fiat money. With the recent move, Falcon claims it has made blockchain assets “fully bankable,” with cryptos being included in the bank’s portfolio statements, as well as in tax reporting documents.

“SBI Group Invests $15 mn in Tangem” Japanese financial services giant SBI Group has invested $15 million in Swiss startup Tangem, maker of a slimline hardware wallet for cryptocurrencies. Tangem describes its crypto storage product as a “smart banknote for digital assets.” Designed to be used like a bank card, the product allows off-chain physical transactions to be used, for example, for in-store payments, once cryptos have been loaded onto the device via an NFC-enabled smartphone.

“Garage to Pilot Sidechain Settlement System” Japanese startup Crypto Garage has acquired regulatory permission to pilot its self-developed settlement system that incorporates Blockstream’s Liquid Sidechain. The license gives the firm the mandate to carry out trials on various cryptocurrency exchanges. The product, called Settlenet, integrates Liquid in order to give crypto exchanges the ability to issue stablecoins backed by the yen. Moreover, the stablecoins can be exchanged against Liquid Bitcoin (L-BTC) and Blocstream’s sidechain

.“Komid Executives Convicted for Volume Rigging” Two executives from South Korean crypto exchange Komid have been handed down jail time for faking trading volume and deceiving investors. The firm’s CEO Hyunsuk Choi received a three-year sentence for his role in the crime, as well as for embezzlement. Choi, the court found, made a number of fake accounts on the exchange in January 2018, and, using a trading bot, made millions of false transactions with cryptocurrency and Korean Won credit that did not actually exist.

“User Selling 100k Crytpo Trader IDs”A user going by the name of “ExploitDOT” is allegedly selling 100,000 personal documents that were used to comply with the know-your-customer (KYC) regulations on cryptocurrency exchanges. He/she posted the sale on July 17, 2018 on a sub-community (DNMAds) of Dread, which is a hidden Reddit-like community that operates on darknets such as Tor and “provides a platform for open community discussion without as much censorship and limitations”.

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