State of the Market #67

9/28/2020 - 10/4/2020

Keith Asmussen, Joshua Ebedes


Market Summary

Dotted lines represent non-trading days (weekends, holidays, etc.)

Top Stories

BitMex Charged With Failing To Prevent Money Laundering


BitMEX has been charged with violating the Bank Secrecy Act for “willfully failing to establish, implement, and maintain an adequate anti-money laundering (“AML”) program.” Commodity Future Trading Commission (CFTC) commented on the potential of digital assets stating that “new and innovative financial products can flourish only if there is market integrity.” Historically, the CFTC and SEC have shown little tolerance for AML violations and this case will most likely serve as a warning to other crypto exchanges taking advantage of loopholes in non-US jurisdictions.

An Inside Look At Wyoming State Regulators Prepping For First Crypto Bank Examinations


Two weeks ago, American-base cryptocurrency exchange Kraken was granted the first special purpose depository institution (SPDI) charter in U.S. history.  Preparing for digital asset bank examinations, Wyoming Banking Division regulators are at a historic moment in the evolution of banking and financial services. With a focus on BSA/AML/KYC/sanctions compliance, each SPDI chartered bank will be examined on a regular basis and has capital requirements similar to a traditional bank. 

 KuCoin Hack Is Proof That Money Laundering Risk With DeFi Is Rising


 The $200 million hack of Singapore-based major cryptocurrency exchange KuCoin differentiates itself from hacks of the past due to the hacker’s complete utilization of DeFi assets. With a near tenfold increase this year only, there is more than $10 billion locked into DeFi projects. The young sector has recently been ridiculed for its innovations with compliance risks, such as zero KYS/AML requirements for users. Many speculate that the lack of basic safeguards in this high-profile incident will bring clear cut regulations to the compliance-adverse crypto sector.

Chart of the Week

(Retrieved from @lawmaster on Twitter)

This graphs three lines depict Golds, Bitcoins, and the S&P 500s price movement immediately following the announcement of President Donald Trump contracting COVID-19. In this specific case Bitcoins price followed the movement of the S&P 500 quite closely and had inverse correlation to Gold. Although these specific correlations don’t necessarily say anything about how Bitcoin price will change with times of uncertainty (whether it should be classified as a risky or safe haven asset), it is very interesting to see how current buyers and sellers in the market react to increased political chaos.

Top Tweets

@ChartGuys give their insight on how the market is responding to the anticipated US presidential election in a 4 part thread

@rohmeo_de shares a cool visual to highlight how massive Grayscale’s 450,000 Bitcoin trust is.

@_JustinMoon_, It can be argued that both invest in your childs future.

Video of the Week

The Bitcoin Standard Podcast Seminar 5 with Michael Saylor

Micro Strategy – a large publicly traded tech company – made headlines in August and September over their massive investment in Bitcoin. They bought approximately 38,250 worth at current prices over 400 million dollars. In this podcast CEO of MicroStrategy, Michael Saylor, sits down with Saifedean Ammous, author of “The Bitcoin Standard”. They discuss Micro strategy's decision to make Bitcoin a reserve asset for the company and how they are adopting the Bitcoin standard.

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Texas Blockchain’s ‘State of the Market’ is a student-led editorial. None of the views expressed by the authors should be taken as the view of the University of Texas at Austin or the Texas Blockchain organization. Furthermore, none of the views expressed should be taken as financial advice in any circumstance.