Observers call for spot-based bitcoin ETF as the bull market raises cost of pre-expiry rollover of positions for futures-based ETFs.
Bitcoin’in (BTC) son rallisi, vadeli işlem ve vadeli işlem tabanlı borsa yatırım fonları (ETF’ler) tüccarlarını madeni para sahiplerine göre dezavantajlı duruma getiren bir piyasa özelliğiyle ilgili endişeleri yeniden canlandırdı.
Kripto para birimi geçen ayın sonlarında 31.000 doları aşarak bir yılın en yüksek seviyesine ulaştı. Yükselişle birlikte, Chicago-Mercantile Exchange (CME) listesinde yer alan Temmuz vadeli işlem sözleşmesi fiyatları ile artık süresi dolmuş (o zamanki ön ay) Haziran vadeli işlem sözleşmesi fiyatları arasındaki fark, boğa piyasasından bu yana en yüksek boşluk olan yaklaşık 500$’a patladı. TradingView grafik platformundan alınan verilere göre 2021’in son günleri.
The sharp widening of the spread, or the so-called steepening of the contango, has grabbed eyeballs in the crypto market. The spread raises the cost of pre-expiry futures rollover, or shifting of bullish long positions from front-month to next-month contracts, and affects the performance of the futures-based products offered by ProShares, VanEck and others. Observers, therefore, said the prevailing excitement about a potential launch of a spot-based ETF is justified.
Futures have an expiry date, which mandates the rollover of positions ahead of the settlement. When the spread between the front-month and the next-month contract widens, rollovers are characterized by traders selling the expiring contract at a low price and entering the new one at a high price (the exact opposite of buy low and sell high), inadvertently bleeding money.
“We were not surprised to see the level of contango in the bitcoin futures market expand over the past week. The CME Bitcoin Futures Market has historically traded in relatively sharp contango during bull market periods, particularly when people are excited about future events (like an eventual spot bitcoin ETF approval). This level of contango will certainly impact [futures-based ETF] investors,” Matthew Hougan, chief investment officer at crypto index fund and ETF provider Bitwise Asset Management, said in an email.
“This generally points to why a spot bitcoin ETF would be superior for most investors vs. a futures-based ETF. People just want to own bitcoin, safely, with no ifs, ands, or buts. A spot-based ETF would achieve that goal,” Hougan added.
The U.S.-based futures ETFs invest in CME-listed bitcoin futures.
The spot-ETF rally
Last month, bigwigs from traditional finance like BlackRock (BLK), Invesco (IVZ), Fidelity, and others filed spot-based bitcoin ETF applications with the U.S. Securities and Exchange Commission (SEC). Bitcoin rallied nearly 12% in June.
A spot-based ETF, if approved, will be like SPDR Gold Trust ETF, which owns gold bars. The product will allow investors to hold their positions indefinitely while eliminating the rollover cost associated with futures ETFs and bypassing complexities involved with storing the cryptocurrency in a wallet. Besides, the spot-based ETF will track bitcoin’s spot price more closely than futures-based ETFs.
In other words, the spot-based ETF will be a better investment avenue than futures-based products like ProShares’ Bitcoin Strategy ETF, which have underperformed the cryptocurrency this year. ProShares’ futures-based ETF, which debuted in October 2021, is the world’s largest and most actively-traded futures-based ETF.
While BTC has gained 88% this year, shares in ProShares’ ETF, trading on NYSE under the ticker BITO, are up only 56%. That’s notable a loss of upside for BITO investors. BITO bled more than bitcoin during the 2022 bear market.
“We might expect underperformance vs. holding spot BTC. The cost of carry emphasizes that futures-based ETFs incorporate the effects of either contango, where holders experience lagging performance or backwardation, where holders experience outperformance. This emphasizes that there is a cost to investors to restricting them to just a derivatives-based ETF,” Ryan Kim, Head of Derivatives at institutional crypto derivatives platform FalconX, said.
“The dynamic does contribute to the excitement over spot-based ETFs,” Kim added.
The situation is unlikely to improve if bitcoin continues to rally, brining more buyers to the derivatives market and keeping futures premiums elevated across the different expiries.
Annualized basis in futures contracts with 30, 60, 90, and 120 days to expiration. (FalconX) (FalconX)
As of Wednesday, the basis in bitcoin and ether CME futures or the difference between futures and spot prices was notably higher at the front end (30-day and 60-day) of the futures curve.
“For context, the 30-day annualized BTC basis just hit 19%, which is the highest value since October 2021, when BTC was trading at above $60,000,” Kim said. “The 30- and 60-day futures are the preferred vehicles for many investors, and more so for bitcoin than for ether.”
Ravi Doshi, co-head of trading at Genesis Global Trading, expressed a similar opinion, saying, “the bullish market sentiment has driven up the front-end CME futures basis.”
Doshi’ye göre, vadeli işlem ETF’lerinin uzun vadeli pozisyonlarını Haziran sözleşmesinden Temmuz’a çevirmesi gerektiğinden ve “spreaddeki likidite eksikliği, Temmuz sözleşmesinde vadeli işlem ETF sahiplerine mal olan geçici olarak %23’lük bir yıllık baza yol açtığından, durum geçen hafta daha da kötüleşti. canım.”
Brett Harrison’s new firm, Architect, aims to be an one-stop platform for institutional-grade crypto trading.
Pek çok insan, yapay zekanın (AI) hemen hemen her sektör üzerinde derin bir etkiye sahip olacağına inanıyor ve kripto ticareti de bir istisna değil. Ana şirketi çökmeden sadece aylar önce istifa eden FTX.US’un eski CEO’su Brett Harrison, AI kullanmanın algoritmik ticaret stratejilerini kodlamayı kolaylaştırabileceğini düşünüyor.
Harrison bir röportajda CoinDesk’e verdiği demeçte, yeni girişimi Architect’in resmi olarak Ocak 2023’te Coinbase Ventures ve Anthony Scarmucci’den 5 milyon dolarlık bir başlangıç turu ile başladığını ve bireysel tüccarlara ve büyük kurumlara yatırım araçları getirmeyi amaçladığını söyledi. Architect’in platformu, Mayıs ayından bu yana belirli müşteriler için beta modunda kullanıma sunuldu.
Around February or May, when interest in AI was at its zenith, Architect saw an opportunity to write algorithmic trading code for crypto, using generative AI tools such as ChatGPT – the chatbot created by Sam Altman’s OpenAI. Often the hardest part about creating such algorithms is the initial step, going from zero to one, because it requires specialized skills and knowledge that not all trading firms have in-house, he said.
“Our idea was to leverage the OpenAI API’s [application programming interfaces] and combine them with our internal trading API’s that we’ve built on top of all these different protocols to make it possible to use natural language probes to generate trading strategy code,” Harrison said. For example, using Architect’s platform, traders could set up software that buys bitcoin on Coinbase (COIN) when its price drops below what it is on other crypto exchanges.
Early stages
But Architect is still in the “early exploration” phase of AI tools, and envisions it as part of a suite of features on its platform. Another AI-powered tool it is considering based on customer feedback is actually using large language models (LLMs) for advanced market indicators, or actually embedding LLMs directly into the trading process, Harrison said.
LLMs such as OpenAI’s ChatGPT and Google’s Bard are artificial neural networks trained on large datasets of language, such that they can understand and generate human-like texts. Due to their proficiency with language, LLMs can understand complex concepts and explain them to users in an approachable way.
“The main thesis is to build good software that helps enable institutions to be prepared for a world that mixes traditional and digital assets seamlessly,” Harrison said. “But we do think that AI is going to be a critical component of most businesses going forward, and we didn’t want to miss the opportunity to be able to leverage AI tools for our users.”
Ultimately, the success of the trading strategies depends on the team behind it, not just the generative AI used to build it. The results you’re going to get from something like OpenAI’s Chat GPT are only going to be as good as the prompts that you’re giving it, Harrison noted.
“You definitely need to review the strategy, make sure it’s working, tweak it, test it,” he said.
The FTX connection
Regardless of the new trading platform, the shadow of FTX – the company that saw one of the crypto world’s most highly publicized collapses – has followed Harrison and Architect.
Harrison resigned from the position of CEO at FTX.US in late September 2022, just months before the exchange’s collapse. Six of eight Architect employees listed on its website used to work at FTX US.
FTX ile bağlantısı ve bağış toplama hakkında sorulan Harrison, bazı yatırımcıların bunu sallayamadığını, ancak diğerlerinin yapabildiğini söyledi.
“Çökmeden önce Sam’in sektör üzerinde nasıl gerçek bir güce sahip olduğu ve bunun benim zam sürecimi bile nasıl etkilediği hakkında halka açık bir şekilde konuştum ve insanlar, Sam’in çöküşten önce şirketle nasıl bir bağlantısı olacağını sordu. Ve sonra, çöküşten sonra, aynı yatırımcılardan bazıları benim FTX ile ilişkim konusunda endişelendi. Ama bunlar konuştuğu herkesten sadece birkaçı” dedi.
“Aslında endüstrinin en zor zamanlarından bazılarında, sadece kriptoda değil, VC [risk sermayesi] manzarasında genel olarak para toplamak için çok başarılı bir şekilde toparlamayı başardık.” dedi Harrison.
High-frequency trading can be lucrative in newer markets like crypto, but HFT is not without its unique risks.
I had a nice conversation this week about high-frequency trading (HFT) in crypto markets. Born out of an idea I had to explore the space generally, a bout of fortuitous timing let me speak with someone who has engaged in it first hand.
I’ve always viewed HFT as a quantitative trading style that combines individual quantitative acumen with technical tools to take advantage of price discrepancies. Market makers in stocks and derivatives markets famously deploy the technique, leveraging coding ability and technical skill to capture trading opportunities first.
Often this involves arbitrage, where one asset has two different prices on separate exchanges. If, for instance, you can buy an asset for $10 on one exchange and nearly instantly sell it for $10.25 on another, you will have essentially secured a riskless profit. Doing so over and over can be highly profitable. Some of the more well-known names in HFT are Jump Trading, Citadel Securities, Virtu and Hudson River Trading.
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In popular culture, HFT has been displayed in Michael Lewis’ 2014 book “Flash Boys,” along with the 2018 film “The Hummingbird Project.” Both describe real and fictional, respectively, efforts to help HFT firms speed up their trading reaction times by fractions of a second by running a new, straighter fiber-optic line across the U.S. Today, the fastest firms use microwave or shortwave radio networks.
HFT certainly has its critics. Some write it off as outright cheating, arguing that access to faster throughput enables them to “front run” orders. Others say that it provides an unfair advantage to institutions over individuals. And others attribute rapid crashes in prices to HFT.
Use of HFT within crypto markets could amplify those critiques to symphonic levels. Still, the part of me that enjoys the marriage between markets and technology can’t help but look further.
My curiosity brought me to a conversation with Keone Hon, CEO of Monad Labs. His current firm’s mission centers around delivering a proof of chain (PoS) blockchain, which increases transaction throughput, and maintains compatibility with the Ethereum Virtual Machine (EVM). His prior role included a role as quantitative trading team lead at a separate HFT firm.
And while I spent the first half of this column discussing what I knew (or thought I knew), I’d like to spend the second half discussing what I learned. Here are some takeaways:
What HFT provides to crypto
Part of the edge is borne out of the nascency of crypto itself. Since there are fewer participants than there are over in traditional markets, price dislocations are more common – meaning larger profits. As more participants come in, those opportunities will become more scarce.
Buyers and sellers are not necessarily prepared to trade at the same time, so HFT firms bridge that time gap, buying from sellers and vice versa.They also compete with other traders to quote prices as tightly as possible.
“At the end of the day, professional automated trading is providing a service, although it may not sound that way,” Hon said.
The different HFT strategies in use
Candidly, this was my most selfish question. I enjoy all conversations around strategy and how individuals synthesize their own interpretation of data into a plan of action.
It was apparent that a class of strategies exists in HFT. One (mentioned previously) is arbitrage, whereby the trader is looking to take advantage of mispricings across different exchanges. Other strategies are alpha-driven, kicked off by “quantitative signals that come from measuring things happening on the order book,” Hon said.
What stood out to me during our strategy discussion was the need to not only be thoughtful in execution, but in position management and exchange evaluation. Part of the requirement of trading across exchanges involves maintaining inventory there, which brings with it additional elements of counterparty risk, particularly with centralized exchanges.
To that end, I got the sense that Hon feels that decentralized exchanges need to catch up to their centralized counterparts in terms of the user experience and quality of execution. My impression is that part of his current firm’s goal is to bridge the current gap between centralized and decentralized exchanges.
Regulation
How can you have a conversation on crypto and trading and not bring up regulation at least once? On that end, I suspect his response will surprise some. My impression is that Hon views sensible regulation as good, if for no other reason than it lets participants operate within a prescribed framework.
“It’s actually beneficial to make sure that exchanges are playing by the rules. It’s good to make sure that they have proof of reserves and assets that they claim,” Hon said.
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This is actually similar to what other crypto participants have told me. A clear set of rules, implemented without malice, would enable crypto participants to operate effectively, efficiently and… quickly.
The agreement offers Talos clients connectivity to Coinbase Prime for spot liquidity and custody services.
Talos, a crypto trading platform for institutional investors, is working with Coinbase Prime to expand access to digital assets for customers of both firms.
With rising demand from institutional investors for more secure and efficient trading platforms, the agreement offers Talos clients access to Coinbase Prime for spot liquidity and custody services, according to a press release. Coinbase Prime, which is typically used by institutional investors, is an integrated system that offers users offline storage and advanced trading.
The pact will also give Coinbase Prime clients access to Talos’s trading and connectivity products, according to the press release.
With institutional investors pushing further into crypto, demand for more sophisticated means of trading, investing and managing the digital asset has ramped up. Last week financial institutions T. Rowe Price, WisdomTree and Wellington Management joined layer 1 blockchain Avalanche’s Evergreen subnet to make execution and settlements more efficient. Last month, Nasdaq said it is aiming to debut its crypto custody services by the end of the second quarter.
“We’ve seen consistently growing demand, despite recent market conditions, for high-performance digital asset trading platforms as institutional investors continue to build for long-term participation in this emerging asset class,” Anton Katz, co-founder of Talos, told CoinDesk in an interview.
Katz added that unlike retail investors, institutional firms entering the space require trading platforms with a much higher standard for safety and reliability along with more efficient means of trading that matches what they’re accustomed to in the traditional financial (TradFi) world.
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Talos raised $105 million in a Series B funding round last May that included investments from U.S. financial services giants Citigroup (C), Wells Fargo (WFC) and BNY Mellon (BK). The crypto trading platform offers institutional investors a “full trade lifecycle” which includes liquidity aggregation, trading, analytics and settlement through a single point of access, according to the statement.
DWF Labs made headlines with more than $200 million of investments in crypto projects such as CryptoGPT or Synthetix. A closer examination reveals that many of their deals aren’t typical venture capital investments, but packaged with market making services, pledges to boost trading volume or even selling tokens directly for a project’s treasury. Industry experts claim red flags and conflict of interest, but the firm says it’s all a misunderstanding.
The giants of crypto venture capital are mostly a well-known group of firms that’ve been around for years, companies like A16Z, Paradigm, Pantera Capital and Digital Currency Group (CoinDesk’s parent).
So the quick and loud emergence of a firm called DWF Labs as a seemingly large player in the space over the past few months caught many by surprise. They announced through press releases and media organizations like CoinDesk and The Block a slew of investments in projects including $40 million for internet alternative provider Tomi, $40 million for artificial intelligence-related token Fetch.AI and $10 million in AI-focused crypto data project CryptoGPT.
But a closer examination reveals DWF, whose founders made their money as crypto high-frequency traders, isn’t exactly a venture capital firm – not always, at least.
While the recent slew of headlines refer to DWF’s partnerships with crypto projects as ‘investments,’ DWF Labs actually functions more similarly to an over-the-counter (OTC) trading desk. The company typically approaches a crypto project with a token, and offers to buy millions worth of the token at a discount to market value, according to conversations with several crypto projects that have worked with DWF.
But DWF Labs says it’s all a misunderstanding. “There might be some questions on the use of the word investment,” said DWF Labs Partner Stefano Virgilli. “When we use the word ‘investment’ – to us the most important thing is that if we’re purchasing the tokens and they’re using the funds to further develop, that’s an investment,” he added.
The controversy
Investments in crypto projects typically follow a venture capital model. Projects tap venture firms for capital via funding rounds (i.e. pre-seed, seed, Series A, etc.) and, in turn, the investors receive a portion of the project’s equity. In most cases, particularly in early stage investments where a project has not yet launched a token, investors will receive a Simple Agreement for Future Tokens (SAFT), a contract that outlines the tokens allocated to the investor if the project launches a token in the future.
DWF Labs’ investments are more ad hoc in nature and the company primarily selects for projects that have already launched a token.
While DWF Labs refers to itself as “a global web3 venture capital and market maker” or “multi-stage web3 investment firm” in press releases, the deals are often presented as “strategic partnerships” that can include token acquisitions, market making services, pledges to boost a token’s liquidity and trading volume, and additional support with marketing and media presence.
Even helping projects’ treasuries to sell their token holdings, according to the press release the firm distributed about its launch in September.
In the post, the firm said that “DWF Labs invests in digital asset companies and supports existing markets, enabling digital asset companies to sell their tokens for up-front capital without adverse price impact,” adding that “DWF Labs buys tokens with its own funds, allowing its corporate customers to sell tokens quickly.”
It is quite common in the crypto industry for market making firms to have venture capital arms. Jump Crypto and Wintermute, two heavyweights in the crypto market-making sector, both began as trading firms. But both have since expanded into cutting venture checks for projects, and even building their own pieces of core infrastructure (Jump has backed the Wormhole cross-chain bridge and Wintermute has launched its own decentralized exchange).
However, the industry standard is that these contracts should be separated. Even though the lines between the two divisions can be blurred sometimes by the market makers, some industry observers have grown concerned about DWF’s recent activity and seemingly packaging different services under partnerships.
“It’s a massive conflict of interest,” Walter Teng, research firm Fundstrat’s vice president of digital assets, told CoinDesk. “If you invest, you want the token’s price to go up. If you market make, you can manipulate the price to go up by spoofing.”
“All of their ‘investments’ are poorly disguised agency OTC (over-the-counter) trades,” a market making firm’s executive told CoinDesk, who asked not to be named due to company policy. “They make a big announcement about ‘partnerships, investments’ or some other nonsense, but in reality it is a way for token projects to sell their treasury without announcing that they are selling their treasury.”
DWF’s managing partner Andrei Grachev defended the firm’s token maneuvers in a recent tweet, calling it “dumb” if a market maker (MM) leaves all the acquired or borrowed assets in a wallet, because an “MM should create markets, provide depth, improve order execution instead of doing nothing and waiting when the market is skyrocketing to execute its call options.”
DWF Labs’ strategy
DWF Labs launched in September, as an investment-focused arm of Digital Wave Finance, a top high-frequency trading firm that trades spot and derivatives on over 40 exchanges, according to the firm’s press release.
Grachev told CoinDesk that DWF Labs’ funding comes from the money earned from profits of the high-frequency trading business. Grachev denied that the firm has received any funding from Russia, a rumor circling within the crypto industry.
Grachev said that the firm has multiple types of investments, some with token lock-ups, others without vesting period, and focuses on projects with tokens. “We prefer to have tokens but we also have several equity deals,” said. “But frankly with equity…it is not our strong side,” he said.
While he said that DWF Labs “usually do not include market making deals in our venture side,” later, he admitted that “we have pure investments without market making, we have market making [agreements] without investment, and we have [them] combined.”
“As a market maker, of course we support our portfolio. If we invest, we will provide much more liquidity to the project compared to if we don’t invest,” Grachev said.
When asked about DWF’s investment strategy and due diligence, Grachev talked about focusing on five sectors – TradFi, DeFi, GameFi, CEXs and artificial intelligence – and aiming to “have stakes in all major chains (…) in order to have access to their ecosystems.” The firm looks for projects with “life and traction,” he said, checking social media posts and what exchanges their token is listed on.
“If a project is listed on BitFinex, Coinbase or Binance, then the project is proven and good because these exchanges have very strict due diligence and very strict policies of listing,” he added.
Grachev also said DWF doesn’t usually participate in specific venture rounds. “We just approach them,” he says.
CoinDesk viewed a series of messages between DWF Labs and a crypto project that showed a member of the DWF Labs team offering to invest in the project and provide free market-making services. DWF told the project it could invest via a direct OTC purchase of liquid tokens from the project’s treasury, or with a lock-up period and market-making services.
Messages from the market maker to another project showed that DWF offered to buy tokens in daily tranches without any lock-up period at a discount or in one installment with a one-year lock-up at a steeper discount. According to the message, DWF promised to help list the token on Korean exchanges including Binance Korea which the firm has “good relationship” with, create options trading and “build narrative” leveraging DWF’s team and media presence.
There were several past announcements when DWF mashed investments and market-making deals.
One instance was its strategic partnership announcement with derivatives trading platform Synthetix. According to a press release on March 16, the firm said it acquired $15 million of the project’s native token SNX “aimed at boosting liquidity and market making,” adding a quote from Grachev that “we are thrilled to invest in Synthetix.”
Blockchain data shows that DFW’s wallet – labeled by crypto intelligence firm Nansen – received 5.3 millions of SNX directly from Synthetix’s treasury wallet between March 14 and March 16. Then, the firm transferred all tokens to Binance in multiple transactions between March 16 and 20.
Transactions between DWF Labs and Synthetix treasury. (Nansen)
In November, DWF announced a $10 million investment in the TON ecosystem. The firm’s press release said that the “strategic partnership” with the project extends to “an investment, token development, market creation and exchange listing.” The partnership also includes “50 seed investments scheduled over the next 12 months,” doubling the TON token’s trading volume in the first three months of the partnership, and developing an OTC market “to let buyers and sellers complete large transactions.”
Another case is the firm’s investment into web3 influencer platform So-Col. According to a story by crypto-focused publication The Block and cited on DWF’s website, DWF invested $1.5 million in “a round” by purchasing So-Col’s native token SIMP in February. Irene Zhao, So-Col’s founder, said that the tokens have a one-year vesting period ending in February 2024. The post does not mention other services besides investing.
However, Nansen’s blockchain data on the Ethereum blockchain shows that DWF’s crypto wallet received 3.3 million SIMP tokens between March 6 and March 24. Within the same period, DWF sent some 2.6 million tokens to KuCoin exchange, then transferred the rest to an unknown wallet on March 30. After the announcement on March 28, SIMP almost doubled from around 1.7 cents in a week, then started to plummet on April 4 towards 1 cent, per CoinGecko data.
CoinDesk reviewed Telegram messages of a So-Col representative saying that they decided to work with DWF Labs because besides serving as a market maker DWF also invested in the project directly helping to extend the startup’s runway.
Sending tokens to exchanges
Grachev said that DWF Labs keeps most of its funds and investments on centralized exchanges (CEXs) and transferring tokens to an exchange does not indicate the company will sell.
“We keep all of our inventory, almost all of our inventory, not only our investments but our own funds on exchanges,” he said.
However, keeping supposedly long-term investments on exchanges is a worrying sign for some industry experts, hidden from savvy blockchain analysts and traders whether DWF sells tokens or uses them for market making purposes.
“It’s a red flag,” a founder, who asked to remain anonymous, of a crypto analytics firm with former market making experience told CoinDesk. “They [DWF Labs] market them as an investment, and then claim to do ‘market making’ so they can keep funds on exchanges and just dump.”
It’s hard to opine on where a firm like DWF should draw the line between VC and market making. Perhaps, a page from the TradFi banking playbook could work. In that realm, investment banking and trading/research is separated by a so-called Chinese wall. Where that line might need to be drawn for crypto investment firms is unclear.
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In the interview, Grachev admits his “biggest mistake” was not properly explaining his firm’s operating philosophy and investment process. “We need to be more open. I want [the community] to know how we work and then let people decide who is right and who is not right,” he said.
Binance assigned a zero fee discount to the BTC-TUSD trading pair last month, waiving the promotion from Tether’s USDT.
The TrueUSD (TUSD) stablecoin’s market share in bitcoin (BTC) trading volume on Binance is catching up to Tether’s USDT following the exchange’s zero fee trading discount, but data shows traders are still reluctant to use TUSD, according to crypto bilgi firm Kaiko.
Between Binance’s BTC-TUSD and BTC-USDT trading pairs, TUSD’s market share rose to 49%, almost equalling Tether’s.
“This is a massive increase over just a few weeks,” Clara Medalie, head of research at Kaiko, said.
However, TUSD’s growth could not offset the rapid decline in the BTC-USDT pair’s trading volume after Binance waived its zero fee discount for Tether, according to Kaiko data. Moreover, larger buy and sell orders are still placed for the USDT pair, per Kaiko.“This suggests that traders are still reluctant to use TUSD despite zero fees,” Medalie added.
(Kaiko)
TUSD’s rise has come as Binance, the world’s largest crypto exchange by trading volume, picked the token as heir of its preferred Binance USD (BUSD) stablecoin issued by Paxos Trust.
The exchange restored trading with TUSD after a six-month pause after Paxos’ decision to stop issuing BUSD and assigned its zero-fee trading discount to the BTC-TUSD pair and waived the promotion from BUSD and USDT starting on March 22.
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The $132 billion stablecoin market is undergoing a major upheaval stemming from a regulatory crackdown and a banking crisis in the U.S. In February, the New York Department of Financial Services (NYFDS), the state’s top financial regulator, forced Paxos to cease minting BUSD, the third largest stablecoin with a $16 billion market cap. Last month, the collapse of crypto-friendly Silicon Valley Bank, reserve partner of the second largest stablecoin USDC, sent shockwaves through the market. In the aftermath, USDC suffered more than $10 billion in outflows.
Tether’s USDT and TUSD have emerged as clear winners of the crisis. TUSD has become the crypto market’s fifth largest stablecoin with a $2 billion market cap. USDT’s circulating supply has grown $10 billion in the past months and is closing in on its all-time high.
Stablecoins are a crucial element in the crypto ecosystem, facilitating trading on exchanges and serving as a bridge between government-issued fiat money and digital assets.
TUSD is a dollar-pegged stablecoin issued by crypto firm ArchBlock, previously known as TrustToken. Its value is fully backed by fiat assets, according to blockchain data provider ChainLink’s proof-of-reserve monitoring tool. In 2020, a little-known Asian conglomerate Techteryx acquired TUSD’s intellectual property rights, TrustToken said at the time.
