Jack Dorsey, co-founder, and CEO of both Square and Twitter, released a white paper Friday detailing plans for Square's decentralized Bitcoin (BTC) exchange tbDEX. Unlike most decentralized exchanges, or DEXs, tbDEX will not utilize a trustless model, and therefore will not feature its own governance token. Instead, it is a message protocol designed to facilitate trust relationships without relying on a federation to control access.
The tbDEX also intends to include many features that make it far less decentralized than a DEX in the truest sense of the word. For starters, the protocol requires that all participants to pass background know-your-customer, or KYC, checks to comply with relevant regulations depending on a user's region. Users can only then connect their wallets to the exchange and swap coins with one another.
Furthermore, the white paper called for the deployment of blockchain analytic solutions, either built-in to the DEX or through a third party, to track transactions on the platform. Such a class of blockchain forensic solutions is potentially a controversial topic. Such a system would likely enable authorities to cross-reference payment IDs and public wallet addresses with KYC information to unveil personal identities behind transacting parties. However, supporters claim that such means of monitoring are necessary to prevent illicit activities.
But centralized features of the tbDEX could also win support from crypto enthusiasts. One distinguishing aspect discussed in the white paper is that of chargebacks, which doesn't exist on most DEXs. If implemented, the ability for Square to reverse transactions on the tbDEX could potentially stop irreversible loss suffered by investors during decentralized finance rug pulls. Square is currently encouraging feedback on the white paper on a newly created Twitter account.
Binance, the world’s largest cryptocurrency exchange, is reportedly in talks with sovereign global wealth funds to sell them a stake in the company.
In addition to planned “mega funding” for its United States-based business Binance.US, Binance is now also seeking global funding to improve relationships with regulators, Binance CEO Changpeng Zhao said in a Tuesday interview with The Financial Times.
According to Zhao, the upcoming funding is aimed to improve its “perception and relationships” with many governments as multiple financial regulators around the world have been cracking down on Binance this year.
“But it may also tie us to specific countries, which we want to be slightly careful with,” the CEO noted.
As Binance is currently at the preliminary stages of discussions, it’s still early to disclose the names of wealth funds involved in the capital raising, Zhao said. “The ticket size involved will not be small. It won’t be a short process.”
Being the biggest shareholder in Binance, Zhao is one of the world’s richest men in the cryptocurrency industry, with a total net worth estimated at $8 billion as of January 2021.
According to the CEO, Binance’s daily transaction volumes surged up to $170 billion in November 2021 from just $10 billion to $30 billion two years ago. Binance.US, the American business operating separately from the global Binance exchange, is planning to raise a “couple hundred million dollars” by early 2022.
Global regulators have been increasingly scrutinizing the Binance exchange this year, with at least a dozen of governments publishing warnings against the firm, including countries like the United States, the United Kingdom, Italy, Canada, Japan, Singapore, Germany and others.
El Salvador’s dollar-denominated bonds have fallen to an all-time low as the Central American nation’s debt started trading in "distressed territory" this week.
El Salvador’s USD bonds fell to 64.4 cents to the dollar on Monday, Nov. 22, following the weekend news that the Central American country would use Bitcoin (BTC) bonds to fund its Bitcoin City initiative. Dollar bonds have fallen steadily since April 2021 when they topped $1.10 according to Bloomberg data.
A dollar-denominated bond is a bond issued outside of the United States by a foreign company or government, that is denominated in USD instead of their local currency.
Monday’s drop resulted in the country’s debt becoming among the worst performers in global trading, Bloomberg reported. Investors are concerned that President Nayib Bukele has shut out the IMF from assisting the nation with development funds.
Managing Director of investment banking company Stifel Nicolaus, Nathalie Marshik, commented that “this announcement cements the ‘anything-but-the-IMF’ path,” before adding that bonds are falling “as the market reassesses possible recovery value lower on the unpredictability of policies.”
The Bitcoin bond will pay 6.5% annual interest in addition to 50% of El Salvador’s Bitcoin gains once its initial investment costs for its mining infrastructure have been recovered. Dividends will be paid in USD or Tether (USDT), according to Samson Mow, Blockstream’s Chief Strategy Officer.
Mow believes that the Bitcoin bond will be an alternative way for institutional investors to gain exposure to Bitcoin without having to hold Bitcoin themselves. It will also be a way for investors to help El Salvador develop more rapidly. Mow, who has been working with the El Salvador government on developing the Bitcoin bond, told Bloomberg TV on Nov. 23,
“We’re trying to structure this in a way that people can present [the Bitcoin bond] to boards and directors as a normal bond because it is a normal bond. It just happens to have a large chunk of Bitcoin tied in.”
This Daily Dose was brought to you by Cointelegraph.