CRC Blockchain Industry Commentary #3
After acquiring Poloniex early last year, Circle is now spinning the company out into Polo Digital Assets. The first changes implemented will be reducing trading fees to zero for the remainder of 2019 and excluding U.S. customers from participating. Circle also plans on spending $100 million on the exchange to build out its capabilities and hire aggressively to reach over 100 full-time employees.
CRC Commentary: That was an anticipated move from Poloniex in the light of strict regulatory environment in the US. US regulators are slow and they prohibit the listing of many tokens that could be considered as securities. However, it is these tokens that also have high trading volumes that could provide an important profit stream. More importantly, Poloniex might try to launch their own platform token, introduce futures trading and lending platforms, and for all these, it is much easier to take advantage of regulatory advantage than to pursue license under strictly regulated environments. There are also rumours that Justin Sun from Tron Network is a potential buyer for Poloniex exchange. That would complicate the matters and take it to another level for the blockchain industry.
Chinese mining hardware giant Bitmain has launched a 50MW (megawatt) cryptocurrency mining farm in Rockdale, Texas. Announcing the news on Monday, Bitmain said the farm can expand to a capacity of over 300MW, making it “the world’s largest for bitcoin mining.” It is Bitmain’s third cryptocurrency mining project in the U.S., per the announcement.
CRC Commentary: Just last week, Digital Currency Group (DCG)-backed firm Layer1 raised $50 million to build mining chips and to run its own electricity substations in Texas. This is an important move by US players to interrupt the monopoly of China based miners. That being said, Bitmain itself is also reinvesting in the US to both reduce the costs by using renewable energy and keep their share of the hash rate in the network. I think looking at this in general perspective, these new investments in the field show how much these companies are convinced that the price of BTC is going to increase and that after the halving mining space will become much more competitive.
The Libra Association is open to launching multiple fiat-pegged stablecoins, rather than the synthetic one it initially proposed.
“We could do it differently. Instead of having a synthetic unit ... we could have a series of stablecoins, a dollar stablecoin, a euro stablecoin, a sterling pound stable coin, etc,” David Marcus, co-creator of Libra, told a banking seminar, as reported by Reuters on Monday.
Marcus stressed that fiat-pegged stablecoins aren’t the association’s new preferred option, but the main goal remains to create a more efficient payments system. He added that the Libra project is still aiming for a June 2020 launch.
CRC Commentary: I am not sure how this single stable coin for each fiat currency will help Libra on their battle with the regulators in different countries. One argument could be that there are already USD-pegged stablecoins in use approved by the regulators and Libra is going to walk the same way as these previous companies such as GUSD or USDC. Another one is that, instead of using a synthetic currency as Libra, their USD-pegged stable coin will be less threatening to governments around the world as they won’t have an ability to pursue a monetary policy other than managing the 1-1 peg. But all that can be considered as get foot in the door strategy by Libra Association to swing all the attraction they got from the regulators and keep their more ambitious plans for the future.
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