Bybit Overhauls Institutional Trading Platform Bybit Institutional

BitMEX CEO Calls for an End to Internal Market MakersIn a recent interview, Stephan Lutz, the acting CEO and group CFO of 100x Group, the parent company of Seychelles-headquartered global crypto exchange BitMEX, expressed his belief that crypto exchanges should phase out their internal market-making teams.Photo by Joe Roberts on UnsplashProp trading desks unnecessarySpeaking with The Block, Lutz argued that with the growth of institutional liquidity providers and high-frequency traders (HFTs) in the market, proprietary trading desks are becoming unnecessary.Lutz stated: “You have enough HFTs out there and prop shops that can perform that function.” He was referring to the role of liquidity providers in filling gaps in the market. He made these comments in response to the emergence of information earlier this week that raised questions about internal trading practices at Crypto.com, a Singapore-based exchange.BitMEX, once the world’s largest crypto derivatives exchange, also used to employ internal traders who acted as market makers. However, Lutz explained that BitMEX’s internal trading team, named Arrakis Capital, now functions primarily as a “treasury desk.” He sees this transition as a natural evolution for crypto exchanges in a market that has matured and attracted more institutional liquidity providers.Arrakis Capital currently performs limited functions, including converting commission fees earned in Bitcoin into fiat currency for operational purposes, hedging BitMEX’s exposure to tokens held as inventory, and making markets for BitMEX’s token $BMEX. Lutz clarified that Arrakis’s market-making activities are limited because external market makers find the token’s liquidity insufficient.Regarding profitability, Lutz stated that Arrakis earns “very minor returns” of up to $100,000 per month from holding T-Bills, but it incurred losses last year. He noted that Arrakis used to play a more significant market-making role when BitMEX dominated the crypto futures market. However, he assured that the trading desk was always segregated, despite accusations in the past.Fee structuresLutz acknowledged that exchanges with internal trading teams have faced increased scrutiny since the controversies surrounding Alameda Research and FTX. To differentiate between benign internal trading teams and hedge fund-like operations, Lutz highlighted several factors, including the separation of client funds and house funds, access to sensitive data, and the ability to move markets on their own exchange. Fee structures also play a role, with low or no transaction fees potentially signaling a market-making motive rather than serving as a counterparty.Lutz’s perspective suggests that crypto exchanges should rely on external liquidity providers and HFTs rather than maintaining internal market-making teams. He argues that the market has evolved. At this point he feels that these teams are no longer necessary, due to the presence of established players within the digital assets space.As regulatory scrutiny grows, ensuring transparency and avoiding conflicts of interest become crucial for maintaining trust within the crypto exchange ecosystem. The digital assets industry is far from arriving at a mature stage in its development. While many in the industry have found the stance taken by regulators to be unhelpful, the industry itself must also demonstrate its ability to iteratively move towards best practice, without that being a knee-jerk response to regulatory enforcement.

BS Universe to Leverage Burrito Wallet’s Multichain Capabilities for Global IP ProjectBS Universe, the Singapore-based company behind the globally popular intellectual properties (IPs) Pinkfong and Baby Shark, said Friday that it has signed a memorandum of understanding (MOU) with Burrito Wallet — the digital wallet developed by Rotonda, a subsidiary of Korean crypto exchange Bithumb. Through this new partnership, BS Universe aims to make the user experience on its open-world ecosystem, Baby Shark Universe, more convenient by utilizing the multichain blockchain support capabilities of Burrito Wallet.Photo by Shubham Dhage on UnsplashThis is part of the company’s goal to introduce a new paradigm by merging global IPs with innovative technologies.Multichain tech meets Web3 ecosystemBurrito Wallet is a Web3.0 digital wallet that supports 11 mainnets including Bitcoin, Ethereum, and Polygon, along with over 1,300 cryptocurrencies. It also incorporates an easy sign-up and wallet formation system while enabling users to send NFTs and virtual assets through chatting without the hassle of wallet addresses, thereby reducing the risk of faulty deposits.BS Universe’s Baby Shark Universe project is a joint venture between Baby Shark Games, a subsidiary of The Pinkfong Company’s gaming division, and Retro Future, a pixel game developer. This project aims to create a Web3-based open-world ecosystem. The company also joined the Polygon ecosystem in April and is consistently updating its products and services.Sneak peek of Baby Shark UniverseBS Universe plans to reveal the pre-alpha version of Baby Shark Universe at Next Block 2023 — a conference co-hosted by Rotonda and Bithumb META, Bithumb’s metaverse subsidiary, for accelerating joint Web3 projects — on September 4. Through efforts like this, the company intends to increase interactions with users.

North Korea Using DeFi for Money LaunderingThe United States Treasury issued a warning on Thursday where it identifies North Korea as a user of DeFi services for money laundering. According to the Treasury, both North Korea and criminal organizations have been using DeFi platforms to launder dirty money.©Pexels/PixabayWhile DeFi has been praised for its potential to democratize finance and provide greater financial freedom to users, it has also been criticized for its lack of regulatory oversight. According to the Treasury, this lack of oversight has made DeFi platforms an attractive target for money launderers and other criminal organizations.In its warning, the Treasury noted that North Korea has been using DeFi platforms to launder money and evade international sanctions. The country is believed to have developed a sophisticated system for laundering money through cryptocurrency exchanges, and it is now turning its attention to DeFi platforms.Illicit money movementCriminal organizations are also using DeFi services for money laundering, according to the Treasury. These groups are said to be using DeFi platforms to move money around the world, in order to avoid detection and to launder the proceeds of their illicit activities.The use of DeFi for money laundering poses a significant challenge for law enforcement agencies, as these platforms operate outside of the traditional banking system and are often difficult to track. The Treasury has urged DeFi platforms to implement strong anti-money laundering (AML) and know-your-customer (KYC) policies, in order to prevent their services from being used for criminal activities.The warning from the Treasury comes at a time when DeFi is becoming increasingly popular among investors and users. According to data from DeFi Pulse, the total value locked in DeFi protocols recently surpassed $100 billion, indicating a significant level of interest and investment in the sector.Calls for greater regulationHowever, the lack of regulatory oversight and the potential for DeFi to be used for money laundering and other criminal activities have raised concerns among regulators and policymakers. Some have called for greater regulation of the sector, in order to prevent its abuse by criminal organizations.Despite these concerns, many proponents of DeFi argue that the sector has the potential to transform the financial industry and provide greater financial freedom to users. They point to the benefits of decentralized systems, such as greater transparency, lower fees, and faster transaction times.The use of DeFi for money laundering is a complex issue that requires a multifaceted approach. While regulators and policymakers must work to implement strong AML and KYC policies, users and investors must also take responsibility for ensuring that they are using DeFi platforms in a responsible and legal manner.Ultimately, the future of DeFi will depend on how the sector is able to balance innovation and regulation. While DeFi has the potential to transform the financial industry, it must also be subject to appropriate oversight and accountability in order to prevent its abuse by criminal organizations.By working together, regulators, policymakers, and industry stakeholders can help to ensure that DeFi is used for its intended purpose — to provide greater financial freedom and empowerment to users around the world.