Cryptocurrencies trade broadly lower for week, Fidelity may launch Bitcoin custody service in March
Feb 01, 2019
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Developments in Financial Services
- A Bloomberg report today highlights that crypto venture funds launched in 2018 exceeded hedge fund starts for the first time in history. In 2018, 124 new cryptocurrency venture funds entered that market while only 114 new hedge funds launched. The Bloomberg report attributes weakness in the Initial Coin Offering (ICO) market as one of the reasons for this shift. Bloomberg interviewed Jeff Dorman, a partner and portfolio manager at Los-Angeles-based Arca, who said, “There’s going to be a lot of opportunity in distressed buying and even activist investing. Often you can buy below the cash value of the company.”
- B2C2 OTC Ltd., a cryptocurrency liquidity startup based in the United Kingdom, has received approval from the United Kingdom Financial Conduct Authority (FCA) to offer contracts for difference (CFDs) to eligible counterparties or professional clients. B2C2 aims to allow investors to increase exposure to cryptocurrency markets while circumventing risks related specifically to crypto custody services, according to co-founder Max Boonen.
- Binance, the world’s largest cryptocurrency exchange by daily trading volume, has added support for cryptocurrency purchases using a credit card, according to an official press release. Binance is enabling cryptocurrency purchases through use of a credit card by partnering with Simplex, a payments processor. Binance CEO Changpeng Zhao discussed that he, “wants to provide Binance traders with fast and easy access to crypto, in the most secure way possible.”
- Boerse Stuttgart Group, Germany’s second-largest stock exchange, has officially launched a mobile cryptocurrency trading application, according to an official tweet today. Dubbed Bison, the cryptocurrency trading application was developed by FinTech Sowa Labs, a subsidiary of Boerse Stuttgart Digital Ventures. The application offers free trading of major cryptocurrencies Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Ripple (XRP). Blocknox, another subsidiary of Germany’s second-largest stock exchange, will act as the custodian for funds held by users through the application.
- Fidelity Investments is aiming to launch its Bitcoin (BTC) custody service this upcoming March, according to a Bloomberg report citing three people familiar with the matter. Fidelity said in a statement on Tuesday, “We are currently serving a select set of eligible clients as we continue to build our initial solutions,” and adding, “Over the next several months, we will thoughtfully engage with and prioritize prospective clients based on needs, jurisdiction, and other factors.” Fidelity Investments is among the first Wall Street-established institutions to offer crypto custody services, though others to explore the field include Bank of New York Mellon Corp., JPMorgan Chase Co., and Northern Trust Corp.
- Genesis Capital, a cryptocurrency lending company, released its Digital Asset Lending Snapshot for 4Q2018 today detailing that the firm processed USD$1.1bn in borrows and lends last year. Because Genesis only processed USD$553mm in borrows and lends from its launch in March 2018 to the end of 3Q2018, the company concludes that, “Q4 loan originations increased more than 100% in the final three months of 2018 compared to the prior six-month period.” Despite a 44% decline in the price of Bitcoin (BTC) from the prior quarter, Genesis still saw its active loans increase to USD$153mm in 4Q2018, a USD$20mm q/q increase.
- Gottfried Leibbrandt, CEO of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), announced plans to launch a Proof-of-Concept (PoC) of a portal that links enterprise blockchain software firm R3 with the Global Payments Initiative (GPI) while speaking at the Paris Fintech Forum. Gottfried said while speaking on a panel, “Our new GPI platform is extremely interoperable and open, and we’ve always had links to other networks. We are announcing later today a Proof-of-Concept with R3 blockchain on trade, where you can initiate a payment on the trade platform, and then it goes into GPI.”
- Intercontinental Exchange (ICE) announced a partnership with major global blockchain firm Blockstream to develop and launch a Cryptocurrency Data Feed product. As per the announcement by ICE Data Services on Twitter, the product will enable real-time and historical data for over 60 different cryptocurrencies. The partnership aims to provide users with a reliable and comprehensive tool to monitor crypto data from major trading markets and exchanges across the world.
- John Van Eck, CEO of Van Eck Associates, suggested in an interview with CNBC that Bitcoin (BTC) investors are moving to gold investments. Van Eck told CNBC, “that Bitcoin pulled a bit of demand away from gold last year, in 2017.” Van Eck went on to say, “Interestingly, we just polled 4,000 Bitcoin investors and their number one investment for 2019 is actually gold. So gold lost to Bitcoin and now it’s going the other way.”
- Ledger, a popular French-based cryptocurrency wallet hardware manufacturer, has launched a dedicated movie application, dubbed Ledger Live, for a suite of its products, as per an official company blog post on Monday. The blog post details that the mobile application will allow Ledger Nano X wallet holders to use their wallet without requiring a cable and/or Bluetooth connection. Additionally, Ledger wallet holders can use the mobile application for, “consultation mode,” which allows users to check their wallet balance information.
- South Korean cryptocurrency exchange giants Bithumb, Upbit, Korbit, and Coinone are partnering to combat money laundering, according to a report by The Korea Herald. The four South Korean exchanges are developing a hotline where domestic users can call with any information on unusual trading or payments possibly related to crimes. Earlier this month, the South Korean government approved only 7 of 21 domestic crypto exchanges following a thorough security audit -- Bithumb, Upbit, Korbit, and Coinone were among those approved.
- Staked, aa cryptocurrency startup that targets institutional investors of proof-of-stake cryptocurrencies, announced that it raised USD$4.5mm in a fundraising round led by Pantera Capital. Other major crypto firms participated in the fundraising round, including Coinbase Ventures, Digital Currency Group, Winklevoss Capital, Global Brain, Fabric Ventures, and Blocktree Capital. On news of an investment in Staked, Pantera Capital partner Paul Veradittakit commented, “Pantera invests in many leading proof-of-stake projects, so we knew we needed a staking solution. We liked Staked because of the experienced team, focus on institutions, and broader vision around helping investors earn yield on their cryptocurrency.”
- The Chicago Board Options Exchange (CBOE) has officially resubmitted its joint application with VanEck and SolidX to the US Securities and Exchange Commission (SEC) for a Bitcoin (BTC) exchange-traded fund (ETF). CBOE initially withdrew its application for a BTC ETF after talks reportedly stalled due to the government shutdown. The SEC will have 240 days to decide whether to approve or reject the BTC ETF application once the application is published to the Federal Register, which has yet to happen.
- NewsKik, a social media messaging application based in Canada, told the Wall Street Journal (WSJ) that they intend to fight back against enforcement by the US Securities and Exchange Commission (SEC) over the company’s Initial Coin Offering (ICO) in 2017. Kik raised roughly USD$100mm through the sale of Kin (KIN) tokens, which can be earned by users on the platform, traded on exchanges, or redeemed for goods and services.
- South Korea’s Financial Services Commission (FSC) confirmed in a press release Wednesday that it will continue to keep and enforce its country-wide ban on Initial Coin Offerings (ICOs). South Korea’s FSC initially banned ICOs in September 2017 due to their lack of stability and vulnerability to manipulation. In September 2018, South Korea’s FSC discovered from conducting a survey that firms conducting ICOs were making use of foreign jurisdictions while still raising funds from South Korean nationals.
- The Central Bank of Iran may be set to ban, “unapproved,” cryptocurrencies from domestic use after publishing a report titled, “Obligations and Rules Regarding Cryptocurrencies.” A translation of the report reads, “any cryptocurrency wallets will be used only for holding and transferring cryptocurrencies and integrating any kinds of services in wallets using cryptocurrencies is forbidden.” The report does not detail which cryptocurrencies are/would be approved and disapproved.
- The Malaysian Securities Commission (SC) announced changes to its Guidelines on Recognized Markets that introduces new rules and regulation pertaining to cryptocurrency exchanges. Cryptocurrency exchange platforms based in Malaysia, the country commonly referred to as blockchain island, will be required to register with the Malaysian SC by March 1st, 2019. Malaysian crypto exchanges will be required to conform to corporate organization requirements, implement robust security measure, and prove that they are capable of contributing to the country’s emerging digital economy as part of the new regulation.
- Valentina Matvienko, the Chairman of the Upper House of Russian Parliament, is urging Members of Parliament (MPs) to draft bill(s) concerning digital economies and assets without any further delay, according to a report by local news outlet TASS. The report details that Matvienko, who has headed the country’s Federation Council since 2011, spoke to individuals from the Upper House Committee for Economic Policy and Russia’s Ministry of Digital Development, Communications and Mass Media about the matter, asking for reasoning behind the notable delay in digital economy bills.
- A Bloomberg article Friday morning highlights that investors who hold proof-of-stake (PoS) tokens could stake their tokens in order to survive the extended cryptocurrency bear market. As per the Bloomberg article, users who stake their tokens, which is essentially depositing tokens as collateral for a chance to be chosen to add the next block to the network’s chain, can receive yields from 5% to as high as 150%, depending on stake size. Bloomberg quotes Multicoin Capital Management partner Kyle Samani, who discussed, “Regardless of market conditions, staking provides returns denominated in the asset being staked. If you’re going to be long, you might as well stake.”
- A new report published by blockchain analytics firm Chainalysis details that two hacker groups are responsible for stealing a total of USD$1bn in cryptocurrencies, as per an article by the Wall Street Journal (WSJ). The report by Chainalaysis describes two hacker entities, dubbed Alpha and Beta, as groups to receive a majority of cryptocurrencies stolen/lost in crypto scams and hacks. Chainalysis describes in its report that Alpha is, “a giant, tightly controlled organization at least partly driven by non-monetary goals,” and that Beta is likely a smaller and less organized, “heavily sanctioned organization heavily focused on money.”
- A new survey published by decentralized data aggregator Fluence Labs finds that the biggest problem facing decentralized application (DApp) developers is user uptake. The survey report reads, “New user onboarding was mentioned by more than three quarters of the respondents as the major obstacle to adoption.” Fluence Lab s maintains contracts with 900 different DApp projects, though only 160 projects filled out the survey. The findings of this survey refute claims that the number one problem faced by blockchain is scalability.
- Charlie Lee, the creator of Litecoin (LTC) and vocal crypto pundit, took to Twitter to declare that he would begin to focus his efforts on making the aforementioned cryptocurrency more fungible. Less wrote on Twitter that, “fungibility is the only property of sound money that is missing from Bitcoin & Litecoin,” while adding that, “I am now focused on making Litecoin more fungible by adding Confidential Transactions.” Lee later discussed that confidential actions could be added to the Litecoin network through a soft fork, which is a source code modification that does not result in the division of a blockchain network.
- Energinet, a Danish state-owned energy company, intends to expand its partnership with distributed ledger network Iota in order to explore new applications for Internet of Things (IoT) in the energy industry. According to an Iota blog post, “This collaboration will include services applicable to Energy and adjacent areas such as smart cities, smart buildings, and mobility,” adding, “This will be done through joint Proofs of Concepts (PoCs) and participation in collaborative IOTA initiatives.”
- Merck, a global pharmaceutical giant, has been awarded a blockchain patent by the United States Patent and Trademark Office (USPTO), as per a report by Cointelegraph. The patent describes a system that uses a combination of Artificial Intelligence (AI) and blockchain technology to determine whether or not physical objects are authentic. Merck elaborated on the patent in a press release, saying, “The new technology uses machine learning to link physical objects to a blockchain through their own unique identifiers or ‘fingerprints’.” The technology can be applied to various unique patterns, including chemical signatures, DNA, and/or image patterns.
- Nvidia, a Taiwan-based computer hardware manufacturer, updated its CY4Q2018 financials today and cited a slump in cryptocurrency mining hardware demand as one of the reasons for lowering its revenue guidance. Nvidia pulled back its CY4Q2018 revenue guidance to USD$2.20bn from a previously projected USD$2.70bn. In addition to a slowdown in cryptocurrency mining hardware demand, Nvidia founder and CEO Jensen Huang also cited, “deteriorating conditions,” in China resulting in a slowed demand for the company’s gaming GPUs in CYQ42018.
- The BitTorrent token (BTT) sale conducted on the Binance Launchpad platform on Monday concluded in less than 15 minutes and sold out of all 50 billion tokens, bringing in about USD$7.1mm. BTT will be used for BitTorrent, a peer-to-peer file sharing network, to, “transact in computing resources shared between BitTorrent clients and any other participating service requesters and service providers.” Each BTT was priced at USD$0.00012.
- The Ethereum (ETH) development team has launched its first pre-release for phase zero of the network’s ongoing transition to Ethereum 2.0, according to an official post on Github. As per the post, “this marks the first release in a series of weekly releases through February 2019. Phase 0 in v0.1 is relatively feature complete and approaching stability.” The upgrade is part of Ethereum’s goal to transition from a proof-of-work validation protocol to a more efficient and scalable proof-of-stake system.
- The Food and Drug Administration of the Chinese Chongqing Yuzhong District is planning to leverage blockchain technology in its operational processes, according to news outlet The People’s Daily. Specifically, the Chinese district agency will implement blockchain technology to increase food supervision, drug quality assurance, and better track general product life cycles. The blockchain technology that will be used was developed by Chinese blockchain technology firm PrimeNumber Chain Technology Chengdu Co., Ltd.
- The Zurich University of Applied Sciences (ZHAW) and Swisscom, a major Swiss telecommunications company, have announced the creation of an integrated, certified e-signature that enables users to legally authenticate a blockchain smart contract. As per a report by news outlet Cash, the two organizations developed a prototype for Ethereum-based smart contract verification through use of an e-signature that can take the place of handwritten signatures required under Swiss law.
- Wrapped Bitcoin (WBTC), a token based on the Ethereum (ETH) network and backed 1:1 by Bitcoin (BTC), officially launched Thursday, as per a press release on the network’s website. Developed in partnership by BitGo, Kyber Network, and other blockchain technology firms, Wrapped Bitcoin is meant to provide users with a, “wide variety of new decentralized use cases including on decentralized exchanges (DEXs), as collateral for stablecoins or lending, for payments, and flexible smart contracts within the Ethereum ecosystem.”
*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio