Brokerages offering unrestricted Bitcoin trading experience huge losses which in some cases have caused large companies to stop paying their affiliates. The sooner this “cryptomania” is over, the better it will be for everyone, brokers, vendors and traders.
Ever since the semi-pathological obsession with cryptocurrency engulfed the lower echelons of digital marketing and affiliate sales entities that litter the alleys of Ramat Gan and Limassol, FinanceFeeds has firmly believed that the vast majority of programs related to cryptocurrency are exactly that – schematics.
It is clear and well recognized among the right and proper leaders of the true e-commerce industry in its major centers of London, New York, Sydney and Chicago that pseudo-venture capital in the form of initial coin offerings is everything. simply a vehicle of fraud. , and those peddling it are in many cases the same low-level semi-literate trusted scammers who have exploited binary options platforms for 10 years.
FinanceFeeds has been clear on its position on these issues early on in the media rampage of this nonsense and, with the vast majority of long-established companies, is backing it.
Therefore, anything about ‘crypto’ in terms of marketing or funding a mundane project that will never come to fruition is as absurd as Icarus’ attempt to fly to the sun.
The same can be said of the development of blockchain technology. Many inexperienced mavericks are now touting the development of blockchain as a means of raising capital, citing investments from very large institutions such as Goldman Sachs and PriceWaterhouseCoopers as benchmarks, when in reality, if they were to conduct a little research in these organizations (I spent 18 years of my 27 year career in electronic trading technology as a system developer in level 1 interbank electronic trading desks) they would quickly get to Realizes that R&D is not for the blockchain, but for the development of a proprietary distributed ledger technology to create transparency and automate certain administrative procedures relating to financial transactions.
This means that no bank has in mind to use blockchain technology as an enabler of distributed ledger technology, because it is inseparable from Bitcoin, which is why banks will develop theirs, devoid of any element of cryptocurrency which is superfluous for its functionality.
Those who tout the flawed justification that blockchain development is the subject of massive venture capital investments have contributed to the artificially high value of Bitcoin. Once banks launch their own distributed ledger, and it becomes clear that the millions have been invested in developing an internally distributed ledger, and not in promoting Bitcoin technology, it s ‘Will act to see the value of Bitcoin fall at the rate of an iron beam from a precipice.
Herein lies part of the risk. Far too much crypto-tagging and lack of transparency, exaggerated values, insidious scammers touting absurd ICOs, and the complete absence of any method of clearing or pricing Bitcoin itself as an asset.
The Securities and Exchange Commission (SEC) views Bitcoin and other unsupported peer-to-peer digital currencies as commodities, and this is indeed a view with which FinanceFeeds agrees.
The downside is that it may well be a commodity by definition, but unlike other commodities, it has no central emitter, and no commodity value to maintain its stability, or even more importantly , to prevent its miners and money changers from stealing e-wallets, or just packing up and running away, circumstances we’ve all seen before.
FinanceFeeds has received documents demonstrating the substantial losses suffered by the few retail brokers who have allowed unrestricted cryptocurrency trading on their platforms, and in contrast to the losses suffered by companies who transfer their orders to liquidity providers and s ” expose to negative client balances in the event of extreme and unpredictable market volatility, according to the removal by the Swiss National Bank of the EURCHF anchor in January 2015, these are losses suffered by brokers categorically “b-book Which internalize their transactions.
There is no way to assess or clear Bitcoin transactions. No liquidity provider or prime broker will accept it, as it is not a centrally issued currency, and Tier 1 banks only process centrally issued currency when providing matching credit to foreign brokers. currencies, hence its status as a commodity.
In one case, a well-known retail brokerage that has less than clean specifications for due diligence when onboarding clients via its very unorthodox methodology in the UK has, according to documentation submitted to FinanceFeeds, lost around $ 40 million as a result of allowing Bitcoin to be traded on its retail platform.
The affected company has now implemented a maximum 20 minute trading window for Bitcoin, which means the broker will automatically close trades after 20 minutes on all Bitcoin related activity. It’s almost like a long binary option, however based on a currency that does not exist, and a commodity that cannot be delivered or demonstrate physical value.
This particular broker, according to a number of its strategic partners, is now unable to pay its affiliates and is therefore withholding said payments.
What is really unacceptable is the lack of transparency of the reports in this case, and the bad leadership of the regulators when dealing with the risks.
Yesterday some of the world’s most renowned brokerage firms had to meet FCA and ESMA guidelines for CFDs. UK companies have been successfully supplying CFDs to loyal and sane UK clients for decades without any problems, but are nonetheless subject to absurd and misguided regulatory wrangling.
FinanceFeeds spoke today with a London actuary very familiar with the matter, who explained
âThe majority of retail customers want to buy, so in this case the market makers are short with no real legitimate route to hedge. It is currently not clear whether the exchange offers from CBOE and CME Group can alleviate this issue. “
Yesterday, CME Group listed its first exchange-traded Bitcoin futures contract under the symbol BTCF8 for an expiration in January. With a centralized exchange, clearing is possible because members of the exchange all have to pay clearing fees.
Still, companies offering risky counterfeit money and letting themselves into financial insecurity while providing a platform for their customers to lose more than their shirts are free to do whatever they want, including signing up. their shares on the stock market and drive them up. by 5% when a huge unknown hole has been filled in its balance sheet, leaving the good quality companies that properly run it down in stock prices due to a completely wrong regulatory stance.
As has been the case from the start, FinanceFeeds maintains that ICOs, crypto platforms, and any over-hyped marketing-related connotation of the digital currency world should be avoided. It is the road to ruin for the broker and the client.
In terms of opinion, we strongly advise against participating in ICO programs, or crypto-startups of any kind. Yes, Bitcoin may well be a commodity, but there is a huge difference between a properly managed and compliant foreign exchange firm in Britain, Australia or America, to a startup touting fake tokens in a nonexistent pattern to raise money. capital for a non-existent chimera, which when all is finished and the money has been stolen, will reduce the values ââof Bitcoin to such an extent that anyone who trades them, broker or client, will catch a very severe cold.
If you as a retail broker want to take a professional’s word for it, just call one of the few top blue chip brokers and see if you can get a liquidity channel for Bitcoin. Not a source of price, a real liquidity channel where transactions can be cleared at the highest level. The answer will be no.
FinanceFeeds has contacted senior executives at the affected company, and no response has been provided.