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In a speech delivered today to the International Swaps and Derivatives Association Annual Meeting, U.S Securities and Exchange Commission (SEC) Chairman Gary Gensler re-affirmed his view that most all crypto assets are securities. "Most crypto tokens involve a group of entrepreneurs raising money from the public in anticipation of profits - the hallmark of an investment contract or a security under our jurisdiction. Some, probably only a few, are like digital gold; thus, they might be like commodities. Even fewer, if any, are actually being used in general commerce for payments." He added that if a swap is based on crypto that is a security then it is a security-based swap that must be registered with the SEC. Gensler stated that whether the platform is centralized or decentralized, offering crypto assets and crypto asset-based swaps means they must "work within our securities regime."

The bitcoin derivatives market is fragmented and contract terms differ dramatically across exchanges. The quality of documentation in the space varies. Perpetual swaps approximate the price of its underlying asset in close to real time. They are shifting away from bitcoin-margined inverse contracts, which have traditionally been dominant, toward USDT-margined linear contracts. Exchanges also vary in how they calculate indexes and funding payments. Perpetual swap volumes have decreased since the start of the year, but have recently surged in line with bitcoin's price activity. The lack of standardization in the derivatives market makes it difficult for traders to assess the degree of risk taken on indirectly via a position's index. Poorly constructed indexes can negatively impact users, especially during market dislocations and periods of volatility.

Citigroup and Goldman Sachs have quietly conducted the first equity swap on a new blockchain built using tools originally designed for ethereum. While this first transaction, a total return swap in which one bank agreed to make a payment based on the returns of an underlying asset, and the other based on a set rate, involved only the two counterparties, another 13 are waiting in the rafters.

A group of 11 banks, including NatWest and Deutsche Bank, have been trialling a distributed ledger technology (DLT) based platform for intraday FX swaps. The trial used technology from Finteum, which has been working on a DLT-based intraday FX swaps platform first announced with R3 and Fnality in 2019. During the trial, the banks engaged in simulated trading and discussion sessions. The plan now is to move to live transactions later this year or early in 2022.

Crypto exchange Bitfinex is launching a perpetual swap that enables traders to speculate on Bitcoin dominance. Dominance refers to Bitcoin's share of the total market capitalization for all crypto-assets.

"The U.S. CFTC gave the green light to another Swap Execution Facility operated by crypto-asset startup Tassat, following SeedCX's and LedgerX's SEF registrations.

Atomic Swaps exemplify the application of irreversible transactions and escrow mechanisms. In doing so, they demonstrate what is possible through disintermediation and programmable money: P2P liquidity networks in an internet of money.

Decentralized finance (DeFi) is expanding into the world of interest rate swaps (IRS), a derivative instrument for exchanging fixed and variable interest rates, which account for more than $1 quadrillion in exchanged value per annum in traditional finance. DeFi firm Voltz Labs has launched a non-custodial automated market making (AMM) IRS trading platform based on the Aave and Compound DeFi USDT, USDC, DAI and ETH lending markets. However, IRS AMMs are challenged by DeFi markets' lack of fixed-rate products off which to price swaps. (Traditional markets offer both variable- and fixed-rate products.)

Six individuals from 'The Community' hacking group have been charged with stealing over $2.4 million in cryptocurrency using the SIM swapping method.

SIM swapping, also known as SIM jacking, is a type of ATO (account take over) attack during which a malicious threat actor uses various techniques (usually social engineering) to transfers a victim's phone number to their own SIM card.

Over the past few years, Axoni, a distributed-ledger technology (DLT) firm, has been building the platform for Citigroup, Goldman Sachs, JP Morgan and other investors to make the convoluted process of reconciling equity swaps closer to a limpid one. The platform will eventually be open to any firm.

US Securities & Exchange Commission (SEC) Chair is taking aim at platforms that offer crypto tokens or other products that are priced off of the value of securities and operate like derivatives. "It doesn't matter whether it's a stock token, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities. These platforms - whether in the decentralized or centralized finance space - are implicated by the securities laws and must work within our securities regime. If these products are security-based swaps [all of the rules that apply to such swaps,] such as trade reporting rules, will apply to them. Any offer or sale to retail participants must be registered under the Securities Act of 1933 and effected on a national securities exchange."

Crypto investor Michael Terpin has written an open letter to US FCC chairman Ajit Pai requesting urgent action on SIM swapping fraud. He asked the regulator to make mobile carriers hide customer passwords from employees and to provide a "no port" option, whereby customers would have to go through a company's fraud department before transferring their SIM information to a new phone. In a SIM swap, criminals pose as the owners of a victim's mobile phone number, convincing telecom providers to grant them access to the SIM card.

"Uniswap is an exchange protocol that allows users to trustlessly swap ERC20 tokens. Rather using the traditional order book model, Uniswap pools tokens into smart contracts and users trade against these liquidity pools. Anyone can swap tokens, add tokens to a pool to earn fees, or list a token on Uniswap.

Ethereum toolkit MetaMask now allows users to swap tokens from within the app itself. MetaMask owner ConsenSys said saying that the new feature would request token prices from decentralized exchanges and aggregators so that users can get the best prices. MetaMask will support Uniswap, Airswap, Kyber, 0x API, 1inch.exchange, dex.ag, Paraswap, Totle, and private market makers for the feature. This approach means that users won't need to navigate these platforms individually to find the optimal price. The feature is initially available to users of the MetaMask extension on the Firefox browser and will be rolled out soon to other browsers and MetaMask Mobile.

The U.S. Department of Justice and the Commodity Futures Trading Commission (CFTC) have filed charges against crypto derivatives exchange BitMEX and its owner-operators. They are accused of operating a facility for the trading or processing of swaps without having CFTC approval as a designated contract market or swap execution facility, and operating as a futures commission merchant by soliciting orders for and accepting bitcoin to margin digital asset derivatives transactions, and by acting as a counterparty to leveraged retail commodity transactions. They are also accused of violating anti-money laundering (AML) and know-your-customer (KYC) regulations. https://www.cftc.gov/PressRoom/PressReleases/8270-20

Magyar Nemzeti Bank has collaborated with the Sovereign Official Digital Association (SODA) to issue non-fungible tokens (NFTs) on a private blockchain. By successfully participating in financial literacy quizzes, Hungarian coin collectors and NFT enthusiasts are being awarded central bank-issued tokens and then swapping and trading them on the Money Museum mobile application. This is part of a contest to win a set of limited edition commemorative coins. As any member of the public can use the blockchain to collect, swap and register their ownership of the coins, this type of activity - though gamified - this is arguably a central bank digital currency (CBDC) pilot.

The BTC- and ETH-based perpetual swaps, are extremely similar to those innovated by BitMEX. The BFX products also offer 100x leverage and use the same interest rate mechanism. However, while BitMEX settles exclusively in BTC, BFX products settle in Tether."

Deutsche Börse and HQLAX have successfully launched their DLT solution for collateral swaps in the securities lending market. The first live transactions were executed by Commerzbank, Credit Suisse and UBS on the Eurex Repo F7-trading system.

The International Swaps and Derivatives Association (ISDA) published four new whitepapers that analyze the legal issues associated with using smart derivatives contracts on distributed ledger technology (DLT). The four papers consider these issues from a French, Irish, Japanese and New York law perspective. An earlier paper published in January explored the topic from the perspective of English and Singaporean law. The analysis concludes that it is unlikely a local court would reject an express choice of law by the contracting parties, whether under ISDA documentation or in any other agreement between the parties and a platform provider. The papers also highlight potential challenges in identifying the precise location of digital assets, which could lead to uncertainty over which jurisdiction's laws would apply.