Clients storm crypto a friendly Swiss bank View in browser

“A central bank-supported digital currency could replace the dollar as the global hedge currency” ~  Mark Carney, Bank of England governor

Market State

The total cryptocurrency market dropped from $278 billion to $256 billion over the last week. Currently the market is recovering back to $262 billion. During the week Bitcoin briefly dropped to $9800 then quickly recovered back above $10000. Bitcoin’s market dominance reached as high as 69.6% last week which means altcoins are getting less and less attention. Many have blamed the Chinese ponzi scheme called PlusToken for the recent price drops. PlusToken has managed to collect at least $4 billion from its investors. Dovey Wan, founder of blockchain based investment company Primitive Ventures, pointed out that Bitcoin’s dip under $10000 might have been directly linked to PlusToken’s large amount of Bitcoin sell-off and urgently called on exchanges to blacklist them. However investigations by researchers at TokenAnalyst, London-based cryptocurrency analytics firm showed that PlusToken operators couldn’t have caused the recent price drops as they did not move significant funds during the price drop.

Most coins have dropped recently. Ether dropped by 15% to $186 since last week. Ethereum is updating its code on the 4th of September. It will be the 8th hard fork for Ethereum which has two parts. The first part will be rolled out this fall and the second part will be activated in the first quarter of 2020. Bitcoin Cash dropped below $300 during the last week. Currently it’s trading at around $304. Litecoin broke down to $70 last week. Following its recent halving event, Litecoin miners shut down their mining machines as they struggled to make a profit. 

Large corporations and even central banks continue to show interest in different forms of digital currency initiatives. Mark Carney, Bank of England's governor suggests that a network of global central bank digital currencies can replace the US dollar. Glenn Fogel, CEO of predicted that cryptocurrencies will continue to grow and become more widely accepted across the globe, specifically outside the United States.

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Quiz of the week

The property of an asset whose individual units are indistinguishable from each other in terms of value and functionality:

  1. Fungibility
  2. ERC-20
  3. Divergence

Scroll down to see the answer at the end of the newsletter.

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Top stories of the week
400 Clients Inquire About Crypto Products From Swiss Private Bank

Maerki Baumann, the 87-year-old Swiss private bank affirmed that 400 new clients approached the bank for their cryptocurrency service. The bank has $8.2 billion in assets under management and became the second Swiss bank to accept money that was generated through business involving cryptocurrencies since August 2018. The bank is facing the challenge of rejuvenating its client base as half of its existing clients are aged over 70 and only 5% are under 40. Maerki Baumann CEO Stephen Zwahlen said that “It’s rather rare for clients to just knock on our door. We suddenly had 400 people wanting to talk with us.  And they were exactly the kind people we had been struggling to access for 10 years with traditional private banking offerings. We found that they were typically between 30 to 40 years old, very well educated and with an entrepreneurial mindset.” He also added that the bank is now aiming to become the go-to private bank for those who are interested in cryptocurrency market and look for crypto related banking services. However, the bank will not be dealing directly with cryptocurrencies. In a first phase, the bank is offering business accounts and advice for start-ups raising capital via digital shares that can be offered directly to the public (so-called Security Token Offerings). At the beginning of next year, it plans to partner with cryptocurrency specialists to provide outsourced storage and trading services for the likes of bitcoin. The bank is now looking to establish the right partnerships that could help it to offer the best products for its clients. A third string, to be added later, is advisory and asset management services for private banking clients who want to invest in the predicted wave of new crypto asset classes. “I would expect over time that digital assets such as crypto/blockchain might even take on a greater significance than our traditional private banking business, particularly in terms of asset growth,” said the CEO of the bank.

Replacing Dollar With Libra-Like Reserve Currency

On the 23rd of August 2019, in a speech given at the annual gathering of central bankers Jackson Hole Symposium summit in the US (which is one of the most important global economic forums), Bank of England governor Mark Carney urged to establish  a new international monetary and financial system (IMFS). The central banker noted that the US share of the global economy is reducing while the dollar remains dominant in the currency markets. The US accounts for only 10% of global trade. But the dollar is still used as the primary settlement currency for international trade. Trade wars are hurting the economies of many countries and multilateral cooperation. He therefore pointed out that the dollar’s dominance as the world’s reserve currency must end. According to Carney first best would be to build a multipolar system, which include multiple reserve currencies, rather than swap one currency hegemon for another. Carney dubs such a basket of reserves a Synthetic Hegemonic Currency (“SHC”) and thinks that such a platform would be based on the virtual rather than the physical. That means that he suggested a central bank-supported Libra-like digital currency basket, that could replace the dollar as the world's new reserve currency.

Facebook’s Libra Currency Under European Union Scrutiny

The European Commission announced it had opened up an antitrust investigation against Facebook’s Libra Association to see if it could breach anti-competition laws. European regulators are concerned that Libra may monopolize the payment sector and gain an unfair advantage in the financial sector. The commission is also examining the possible integration of Libra-backed applications into Facebook services such as WhatsApp and Messenger. Their investigation focuses on the governance structure and membership of the Libra Association. The association has 28 members including Visa, Mastercard, PayPal, Uber and others. Each of the members pledged to invest at least $10 million into Libra. Several members of the Libra Association are considering to leave the project. They are concerned about attracting unwanted attention from regulators.

Binance Announced New Libra Like Stablecoin Venus

The world’s largest cryptocurrency exchange Binance has announced its initiative called “Venus” which will develop regional stablecoins and digital assets pegged to fiat currencies across the globe. Venus aims to support the development of localized stablecoins in developed and developing countries. The exchange has already launched Bitcoin pegged (BTCB) and British Pound pegged (BGBP) stablecoins on their Binance chain. Binance welcomes government partners, companies and organizations with a strong interest and influence on a global scale to collaborate with them to build a new open alliance and sustainable community. Binance calls its project an “independent, regional version” of Facebook’s Libra. The Venus stablecoin would target countries such as China or India where Libra is not allowed due to local restrictions.

Bakkt To Launch Bitcoin Futures Very Soon

Bakkt, a cryptocurrency futures trading and custody platform being built by the Intercontinental Exchange (ICE) in New York, has won approval from New York State Department of Financial Services (NYDFS) to trade physically-settled daily and monthly Bitcoin futures contracts and custody services. Many believe that this approval would legitimize the cryptocurrency industry before institutional investors. The firm’s Bitcoin futures contracts have already received approval from the Commodity Futures Trading Commission (CFTC). Bakkt plans to launch its service on the 23rd of September. Physically-settled Bitcoin futures contracts is an important milestone as it offers institutions to buy and hold Bitcoin through an end-to-end regulated system approved by the CFTC and NYDFS and backed by ICE.

PlusToken Ponzi Scheme Caused At Least $4 Billion in Damage

The Chinese ponzi scheme PlusToken may be the largest in crypto history. A study conducted by Elementus revealed that the PlusToken scheme involved over $2 billion worth of Ether and that is only the Ethereum-related transactions. PlusToken offered its investors monthly returns of anywhere from 10% to 30% and traded on popular Asian exchanges such as Huobi and Bithumb. The ponzi scheme also accepted Bitcoin, Ripple and EOS. In total the ponzi scheme caused at least $4 billion in damages and affected 800000 retail investors from 100 countries. This makes PlusToken the largest ponzi scheme to date, placing it ahead of Bitconnect and Onecoin. The Chinese authorities have arrested six members of the PlusToken team. Leo, the alleged co-founder of PlusToken is still at large and funds are still on the move.

Another Fake Satoshi Comes Forth

The identity of Bitcoin’s anonymous creator Satoshi Nakamoto has remained a big secret. Many have self proclaimed to be Satoshi from the Australian entrepreneur Craig Wright who is suing anyone who doesn’t believe him. Yet no one has managed to provide cryptographic proof of identity. Another person has recently tried to claim the title of Satoshi Nakamoto. This Satoshi revealed their real name and wrote a memoir blog post called My Reveal. In the three part blog post he wrote about the origins of Bitcoin and why he hasn’t moved his 980000 Bitcoins etc. The contact email of the blog leads to Ivy Mclemore & Associates which is a marketing agency based in New York. The crypto community wasn’t moved by the new Satoshi and didn’t believe him. If the real Satoshi wanted to reveal himself, he would sign a message using his private key.

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Quiz answer

The property of an asset whose individual units are indistinguishable from each other in terms of value and functionality:

The correct answer is “A”. 

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