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Crypto Investment Firm CoinShares Begins Trading on Nasdaq Nordic

5 years 7 months ago

Digital asset manager CoinShares has begun trading on Nasdaq Nordic after an oversubscribed public offering.

  • CoinShares listed Thursday on the Nasdaq First North Growth Market, an alternative stock exchange for small and medium-sized growth companies in Europe.
  • The offering consisted of 3,364,403 shares at 44.90 SEK ($5.29) apiece and totaling 151 million SEK ($17.8 million), according to an announcement.
  • The Jersey-based investment firm said the offering was oversubscribed by over 400%, garnering subscriptions for 675 million SEK (nearly $80 million) from 2,280 new shareholders.
  • Shares are trading under the ticker “CS”, despite an earlier release stating it would be “COIN” – one also proposed for Coinbase’s upcoming listing.
  • In February, CoinShares launched an Ethereum-back exchange-traded product (ETP) on Swiss SIX exchange, which already boasts around $75 million in assets under management.

See also: CoinShares Releases DeFi Index Token for Institutional Investors

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OpenZeppelin’s ‘Defender’ Gives DeFi Teams a Weapon Against Flash Loan Attacks

5 years 7 months ago

OpenZeppelin, a cryptocurrency software and security firm, has just released a software suite for decentralized finance (DeFi) projects fighting against flash loan attacks and other exploits.

Defender is a software suite that provides teams with alerts when an exploit is taking place, as well as automated scripts to respond to that exploit in real time. 

Since cropping up last summer, yield farming applications and other DeFi markets have populated the Ethereum blockchain and attracted billions in capital. These pools of capital have also become lucrative honeypots for cyberattacks.

Related: Crypto Fund CoinShares Jumps 33% in First Day on Nasdaq’s Swedish Exchange

Perhaps the most common is the flash loan exploit, wherein an attacker borrows tokens from several lending pools at once and uses each loan to pay down the others, all the while using the excess to extract value from other markets. To ensure the attack goes through quickly, the attacker(s) pay a much-higher-than-average transaction fee.

From Yearn to Compound to Cream, decentralized financial platforms have collectively lost nearly $150 million from these exploits since 2020.

Defender suite, OpenZeppelin CTO Jonathan Alexander told CoinDesk, is meant to mitigate the effects of these attacks and give teams automated tools to respond to them as they are happening – something that could help reduce losses in the future.

“If you detect something you can notify the team, but you can also automate actions. You can call an admin function to pause the smart contract or move tokens from one place to another. Monitoring is great practice … but now you can also respond with automated action.”

How does Defender work?

Related: The Node: COVID-19 and the Need for Web 3.0

The key to Defender ensuring a proper response time to an exploit, Alexander said, is that it monitors and alters teams to exploits and offers them ready-to-deploy code to respond to the attack. These pre-coded scripts can do things like pause or upgrade a smart contract, or they can perform more menial, quotidien automated tasks, like transaction relays. 

Two of the more important features, Defender Sentinel and Defender Admin, could help put a stopper in the flash loan attacks that have swindled hundreds of million in tokens in the past year.

In one $11 million exploit, Yearn attackers manipulated the exchange rate of DAI in Yearn vaults by taking out flash loans on Aave for USDT and USDC; these were then deposited into Curve Finance pools to fudge the exchange rate involving USDT, USDC and DAI, which affected the price of DAI in Yearn vaults causing liquidations and losses.

Defender would pinpoint these attacks as they are happening by scanning blocks for high transaction fees. If there’s an irregularity, the team receives a notification (on Slack, for example) and they can choose from one of Defender’s automated scripts to respond to the attack. One of these could halt all operations on chain, for instance, or blacklist addresses.

Right now, Defender can’t stop an exploit before it happens, but it could be used to stop it in its tracks before the exploiter takes off with a bunch of coins. In the future, OpenZeppelin hopes to release a version that can track malicious transactions in Ethereum’s mempool (a virtual holding tank for transactions), though this will take time.

“We’re monitoring block by block. Right as a block is mined, the Sentinels will run and fire autotasks, so we’re talking about seconds reaction time. That still is after the fact,” Alexander said, “but quick reaction in past exploits could have saved millions of dollars.”

Whereas before response coordination to these attacks has relied on social media and message platforms, fixes took anywhere from minutes to hours. If Defender works as described, the minutes and seconds edge it gives teams in the race against the blockchain clock could add up to millions in saved funds.

In a demo shown to CoinDesk using a historical state of the Ethereum blockchain, OpenZeppelin replayed an old DeFi exploit to demonstrate Defender’s reaction and response. Alexander said that any team can replay their old exploits using the software to see how things could have gone differently.

A potential ‘game changer’ for flash loan mitigation

OpenZeppelin is already working with players like Yearn, dYdX, Synthetic and others to get their solution working in the wild.

“We are especially excited about being able to implement automation knowing that security best practices are built in. Above all, Defender has helped us tackle the unknown-unknowns of security so we can keep building,” said Aparna Krishnan, co-founder of Opyn, a DeFi options platform, calling the new tool a “game changer.”

Brendan Asselstine, the CTO of prize pool DeFi protocol PoolTogether, said his platform uses Defender “to automate several aspects of our protocol” and “rely on it as a key part of our infrastructure.”

Give the rate of flash loan attacks on the DeFi ecosystem, now that Defender is launched, it may not be long before we see its capabilities in action.

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CipherTrace Releases Its FATF-Friendly AML Tools for Crypto Exchanges

5 years 7 months ago

Blockchain analytics startup CipherTrace has released its anti-money laundering (AML) tool for cryptocurrency firms, called “CipherTrace Traveler.” 

The CipherTrace solution is named after the so-called Travel Rule, a set of strictures that require funds over a certain amount being transferred between exchanges to be accompanied by personally identifiable information (name, date of birth, etc.) of the originator and beneficiary of the transaction.

Over two years in the making, CipherTrace Traveler is based around TRISA, or the “Travel Rule Information Sharing Alliance,” a non-profit collaboration of 150 cryptocurrency stakeholders. Traveler is aimed at all virtual asset service providers (VASPs), such as crypto exchanges, custody providers, over-the-counter trading desks, banks and other financial institutions.

Related: Crypto Fund CoinShares Jumps 33% in First Day on Nasdaq’s Swedish Exchange

“It’s a commercial offering but with an open-source and decentralized component that has involved 150 VASPs working on TRISA technical standards,” CipherTrace CEO Dave Jevans said in an interview, adding:

“There are large financial institutions that need a commercial product to base their business on, as well as many small VASPs and OTC desks that aren’t going to hire a programmer at $10,000 a month to build this stuff.”

In terms of the cost of deploying CipherTrace Traveler, Jevans said commercial arrangements work on a sliding scale, based on the size of the operation and its needs, adding that the solution is affordable for small firms. 

It goes to show how far new VASP rules will reach.

Related: The Node: COVID-19 and the Need for Web 3.0

A couple of years ago, global AML watchdog the Financial Action Task Force (FATF) recommended cryptocurrency service providers fall in line with the AML measures followed by the rest of the financial system, a difficult problem since crypto is pseudonymous by design.

The next FATF plenary meeting in June will see a review of progress made by countries and VASPs. While travel rule insiders emphasize this is not a hard and fast deadline, some jurisdictions, such as Singapore, already require firms to show a travel rule solution is in place, Jevans pointed out.

“As of this year, Singapore has said there’s no license if you don’t have a solution,” said Jevans. “The U.S. has claimed that you should have been doing it already. However, they’re also realistic and have said until there are solutions and people are using them, there’s not going to be fines for anyone, so you get a period of relaxed enforcement.”

There have been a number of proposed technical solutions, some using blockchain technology itself to create open directories of VASPs. CipherTrace Traveler and the TRISA VASP directory rely on battle-tested certificate authority technology widely used across the internet. 

In terms of TRISA interoperability, or the extent to which the protocol can talk to other proposed travel rule solutions, CipherTrace has conducted tests with most of the other players in the market, including Switzerland’s OpenVASP, the Ethereum-based Shyft Network and the ING Bank and Standard Chartered-backed Travel Rule Protocol (TRP).

“On the TRISA side of things, I think there’s pretty good interoperability with the TRP travel protocol and also a fair bit of work done with OpenVASP, the Swiss offering,” Jevans said. “When it comes to the U.S. Travel Rule Working Group, one of their members are on the TRISA weekly calls.”

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Nexo Grants $150K to Brink for Open-Source Bitcoin Development

5 years 7 months ago

Nexo, a crypto financial and lending service business, is giving $150,000 to Brink, an independent, nonprofit organization, to fund open-source Bitcoin development.

The contribution puts Nexo in line with other crypto and Bitcoin companies like Square, Gemini, Kraken, Coinbase and many others that have started contributing millions of dollars toward open-source development, particularly in the past year or so. The six-figure sum will go toward supporting another developer in the next round of Brink funding later this month.

“Thanks to Bitcoin’s spectacular rally over the past months, we’ve reached that long-awaited stage where institutional investors and retail clients alike are flooding into the crypto space en masse,” said Antoni Trenchev, co-founder and managing partner at Nexo.

Related: Crypto Fund CoinShares Jumps 33% in First Day on Nasdaq’s Swedish Exchange

“We must all be aware, however, that the need to maintain the protocol grows proportionately to Bitcoin network use. It is our responsibility, as key actors in the crypto economy, to allocate time, effort and funds to its healthy and sustainable future”.

Funding Bitcoin development

Founded by Bitcoin Core contributor John Newbery along with fellow Bitcoin Optech associate Mike Schmidt, Brink is a 501(c)(3) non-profit organization that allocates grants to Bitcoin developers. Brink’s first and only funding so far has gone to Gloria Zhou, who received a Brink fellowship for her work on mempool transaction packaging and relaying.

Funding from organizations like Brink and others are crucial for Bitcoin’s largely volunteer-driven development. Now that bitcoin is a $1 trillion asset, more users rely on the quiet work of these developers to keep the Bitcoin protocol and network up to date. 

Brink acts as a sort of funding distributor for companies that want to contribute to open-source development but don’t want to deal with the process of creating and managing a grant program. Instead, they are able to donate funds to Brink, which then vets and trains developers and takes care of the grant administration.

Related: The Node: COVID-19 and the Need for Web 3.0

Before, Bitcoin’s brightest developers often donated their time, but now these men and women can pay their bills and work on Bitcoin full time without having to necessarily compromise over salary and contribution opportunities. Bitcoin companies like Blockstream and Chaincode Labs were some of the earliest organizations to fund open-source Bitcoin development, followed by BitMEX exchange.

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South Africa’s Regulatory Uncertainty Driving Away Crypto Startups: Report

5 years 7 months ago

Fear of a regulatory clampdown in South Africa is driving cryptocurrency startups to look to more friendly environments.

  • Some crypto exchanges have already made the decision to go, Bloomberg reported Monday.
  • For example, Revix is shifting its head office to the U.K. and also planning a Germany-based location.
  • The Financial Sector Conduct Authority (FSCA) is seeking to regulate cryptocurrencies with more power to prosecute fraudsters, Head of Enforcement Brandon Topham told Bloomberg in January.
  • The looming changes come after the collapse of Mirror Trading Investments (MTI) in December 2020, which had collected over 23,000 bitcoin from investors before its CEO allegedly fled to Brazil.
  • Regulators will focus on better protection for consumers rather than businesses, according to Topham, who added more proposals are expected in coming months.
  • Until now, authorities in South Africa have been “incredibly slow in terms of regulation,” according to Sean Sanders, CEO of Cape Town-based Revix.
  • This stymies growth as customers “arrive at our platform with skepticism,” he said.

See also: South Africa’s Tax Agency Is Clamping Down on Crypto Users: Report

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Crypto Lender BlockFi Raises $350M at a $3B Valuation

5 years 7 months ago

Crypto lender BlockFi has raised a whopping $350 million.

Investors in the Series D funding round valued the company at $3 billion, BlockFi announced Thursday. The round was co-led by Bain Capital Ventures and joined by a slew of others.

BlockFi is looking to cement itself as one of the leading lenders in the cryptocurrency industry, providing both trade execution services for institutions and opportunities for retail investors to get yield on their bitcoin holdings. 

Related: Crypto Investment Firm CoinShares Begins Trading on Nasdaq Nordic

BlockFi currently has $10 billion in outstanding loans, $15 billion in total assets and has been “operating profitably for several months,” BlockFi CEO Zac Prince told CoinDesk in an interview.

The latest injection of capital will go toward doubling BlockFi’s 500-person team by the end of 2021, launching a bitcoin rewards credit card in the second quarter and expanding the focus of its retail products to markets outside the U.S., said Prince.

Plus, BlockFi wants to add services outside of just crypto. This could include digital securities, but Prince declined to comment further. 

“I think that a crypto company or multiple crypto companies have the opportunity to replace traditional banks on a global scale for the primary banking relationship with consumers,” Prince said. 

Related: OpenZeppelin’s ‘Defender’ Gives DeFi Teams a Weapon Against Flash Loan Attacks

BlockFi said Thursday it has 225,000 users, up from 10,000 in late 2019.

BlockFi funding spree

With Thursday’s announcement, BlockFi has now raised more than $450 million in venture capital. The firm’s $50 million Series C was announced last August, when it had a mere $1.5 billion in crypto assets on the platform.

“We are interested in becoming a public company, and as you start to think about doing that the composition of your capital base and types of investors shifts towards folks that can consider holding their position through a public event,” Prince said of the firm’s future plans. 

The new funding will also “provide capital for select acquisition opportunities,” BlockFi said in a press release.

This week, the lender came under fire on Crypto Twitter for arbitrage trading with shares of the Grayscale Bitcoin Trust (GBTC). 

BlockFi’s position in GBTC “is substantially less than 20%” of total assets, Prince said.

Last month, the firm launched a bitcoin trust to compete against Grayscale’s offering, although it also increased its shares in GBTC in recent weeks and has used the premium on the fund to make money off arbitrage trades for its clients. (Digital Currency Group, the parent company of Grayscale, also owns CoinDesk.)

In January, BlockFi launched an over-the-counter market trading desk; it rolled out private client services in Asia in February.

Pomp Investments and “partners of DST Global” joined Bain in co-leading the Series D, according to a press release. The $350 million funding round – among the largest in the crypto space in recent memory – includes participation from Susquehanna Government Products, Bracket Capital, Paradigm, Valar Ventures, Morgan Creek Digital, Akuna Capital, PJC, Hudson River Trading, ParaFi Capital, Jump Capital, Pacific Century Group, Gaingels, Third Prime, Kenetic, CMS Holdings, Breyer Capital, The Venture Collective and Castle Island Ventures.

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Luxury US Hotel Group Now Accepts Bitcoin, Dogecoin and Other Cryptos

5 years 7 months ago

Kessler Collection, a luxury hotel group in the U.S., is now accepting cryptocurrencies for bookings through payment processor BitPay.

  • In an announcement Tuesday, the Kessler Collection said guests can now use cryptocurrencies such as bitcoin, bitcoin cash, ether and dogecoin, as well as the stablecoins USDC, Binance USD, Gemini Dollar and PAX, as a form of payment.
  • For those wanting to pay with crypto, Kessler Collection hotels will send an email invoice allowing guests to pay from their BitPay wallet.
  • “This move will make it easier for guests traveling globally, both in time saved from going to a local currency exchange and in money saved with a lower exchange rate,” said Kessler CFO Fravy Collazo.
  • The group owns a number of hotels across the U.S., such as the Beaver Creek Lodge, Casa Monica Resort & Spa, Elliot Park Hotel, Grand Bohemian Hotels Asheville and Charlotte and more.

See also: Supercar Maker Mazzanti Cruises Into Crypto With Bitcoin Payments, Token Sale

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Former Coinbase UK Chief Joins Crypto Payments Company MoonPay

5 years 7 months ago

MoonPay, a cryptocurrency payments infrastructure provider, has appointed former Coinbase UK CEO Zeeshan Feroz as its chief growth officer.

  • According to a Thursday announcement, Feroz, who holds a number of advisory roles in the cryptocurrency space, will help MoonPay expand globally after it secured approval for a virtual financial asset license in Malta.
  • “As we continue to build MoonPay, maintaining and managing our exponential growth in a sustainable manner will be key,” said Ivan Soto-Wright, CEO of MoonPay.
  • Feroz previously spent several years as CEO of Coinbase UK, and was global head of payments at crowdfunding firm Tilt.com before that. He has also held positions at Skrill and Paysafe.
  • In February, cryptocurrency payment services company BCB Group appointed Feroz as an adviser.

Read more: Coinbase Is Going Public: Everything You Need to Know

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Ether Uptrend Is Weakening, Could Test Lower Support: Technical Analysis

5 years 7 months ago

Ether (ETH), the second largest cryptocurrency by market cap, is up about 140% for the year to date, but the uptrend has slowed since January. The first level of support is around $1,561, defined by its 50-day volume weighted moving average.

  • The relative strength index (RSI) made a series of lower highs since January, diverging from ETH’s uptrend.
  • Initial support for ETH is around $1,561, with lower support around the $1,300 breakout zone.
  • Resistance remains around the $2,000 level, which set in February as fresh all-time-high for ETH.
  • ETH has trailed bitcoin (BTC) since the Chicago-based commodities exchange CME launched its new ether futures contract in early February.
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Former Mt. Gox CEO Claims Rehabilitation Plan Better for Creditors Than Class Lawsuit

5 years 7 months ago

The CEO of Mt. Gox has opposed a motion for class certification in a lawsuit brought by one of the collapsed exchange’s former users on the basis that the draft rehabilitation plan more beneficial to them.

A supplement filed by Mark Karpeles’ attorneys on Tuesday states that under the draft rehabilitation plan, Mt. Gox creditors will be paid in a combination of bitcoin, bitcoin cash and yen according to their present value.

Gregory Greene, for example, the plaintiff suing Karpeles for fraud and negligence, would currently receive the equivalent of $347,083 from 6.33 BTC, 6.33 BCH and over 2.4 million yen, according to a calculator set up on a blog to aid creditors.

Related: Crypto Investment Firm CoinShares Begins Trading on Nasdaq Nordic

See also: Mt. Gox Creditors Can Claim 90% of Bitcoin Left in Bankruptcy: Bloomberg

Greene has been claiming for the value of the crypto and fiat held in Mt. Gox when the exchange was hacked and went offline in 2014, which was worth around $25,000. Karpeles’ attorneys note the yen alone Greene would receive under the rehabilitation plan is currently worth over $22,000.

They conclude that a class action would not be “the superior method to address these claims” in contrast to the rehabilitation plan which Mt. Gox creditors will soon be able to vote on and recover their losses through the Tokyo District Court’s proceedings.

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Bank of Russia Eyes Digital Ruble Prototype in Late 2021: Report

5 years 7 months ago

Russia’s central bank is planning to showcase a prototype for its ruble-backed digital currency later this year, according to its deputy chairman, Alexey Zabotkin.

Speaking at an online event hosted by the Russian Economic School, a Moscow-based private college, Zabotkin explained the prototype would be available for people to “kick its tires,” but won’t support any real money transactions.

“Next year, based on that prototype and any additional developments needed, we will start testing it,” Zabotkin said as reported by news agency Prime on Wednesday.

Related: Crypto Investment Firm CoinShares Begins Trading on Nasdaq Nordic

The comments show that, despite the earlier controversy caused by the central bank digital currency (CBDC) project among regulators and Russia’s financial industry players, the Bank of Russia is still moving forward with the idea.

“The absolute majority of the feedback we got on our report, 83% of it, supported the idea of the digital ruble,” the Bank of Russia’s press office told CoinDesk in an email.

“We’re keeping on with the plan we earlier revealed. At this point, we’re in the process of developing the design of the digital ruble, which will be public and discussed with the market participants. The decision on the launch will be made next year based on testing results,” the press office added.  

The project was first unveiled in October, when the Bank of Russia published an analytical report outlining the possible design of a ruble-backed CBDC. The report suggested several scenarios for the digital ruble’s operations and requested public feedback. Listed benefits of the project included the ability to track government spending more effectively and to provide digital payment options in areas where internet connections are scarce.

Related: OpenZeppelin’s ‘Defender’ Gives DeFi Teams a Weapon Against Flash Loan Attacks

See also: What Is a CBDC?

Back then, Bank of Russia chairwoman Elvira Nabiullina said it hasn’t been decided yet if the digital ruble would actually be issued, but the concept was “promising.” She also said that the central bank would likely pilot the system for testing and public feedback in late 2021, and then take the decision on whether to move to a launch.

Following the publishing of the report, Russian banks and fintech companies expressed concerns that the models proposed for the digital ruble were excessively centralized and could harm private banks’ business, making them compete with the central bank.

Nabiullina brushed off the concerns, however, and in February, the central bank said it would update the CBDC concept and make its design friendlier for banks, as news agency RBK wrote at the time.

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US Lawmakers Make Third Attempt to Bring Legal Clarity to Cryptocurrencies

5 years 7 months ago

U.S. Representative Warren Davidson (R-Ohio) reintroduced his signature bill on Monday, marking the third attempt in three years to push through regulation that would provide a clearer legal standing for cryptocurrencies.

According to a press release from Davidson’s office on Monday, the Token Taxonomy Act, first introduced in 2018, seeks to exempt certain cryptocurrencies and digital assets from federal securities laws.

Specifically, the bill aims to amend the Securities Act of 1933 and the Securities Exchange Act of 1940 for that purpose. If successful, regulators such as the Securities and Exchange Commission would be afforded greater clarity on how best to enforce securities laws as it relates to cryptocurrency tokens.

Related: Crypto Investment Firm CoinShares Begins Trading on Nasdaq Nordic

“Currently, a patchwork of laws and regulations creates confusion and even hostility to various blockchain businesses,” the release states.

Representatives Ted Budd (R-N.C.), Darren Soto (D-Fla.), Scott Perry (R-Penn.) and Josh Gottheimer (D-N.J.) co-sponsored the bill, which is now making its third pass through the House of Representatives after last hitting a wall in 2019.

Davidson said the window of opportunity for the U.S. to lead the world on blockchain technology is “closing” and that his country needs to move quickly for fear of being “left behind.”

See also: US Lawmakers Introduce Bill to Clarify Crypto Regulations

Related: OpenZeppelin’s ‘Defender’ Gives DeFi Teams a Weapon Against Flash Loan Attacks

“Other countries have found ways to regulate blockchain projects and, in doing so, have made themselves more attractive to entrepreneurs,” according to Davidson.

Only by establishing the “appropriate regulatory environment” can the U.S. ensure blockchain innovations happen locally “for the benefit of Americans,” he said.

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Goldman Sachs Says Client Demand for Bitcoin is ‘Rising’

5 years 7 months ago

Goldman Sachs has been seeing more demand for bitcoin among its clients, according to its president and chief operating officer.

In a report by Reuters on Wednesday, John Waldron said that, while Goldman was “regulated” on what it could do, the bank continues to “evaluate” bitcoin and “engage” with clients.

“Demand is rising,” said Waldron, who is also Goldman’s bank president.

Related: Crypto Investment Firm CoinShares Begins Trading on Nasdaq Nordic

The comments come as the bank relaunched its cryptocurrency trading desk, three years after shelving plans to do so, with the intention to support futures trading for bitcoin.

The move also opens up the possibility for Goldman to pursue a bitcoin exchange-traded fund as it strengthens its push into digital assets. Meanwhile, the multinational investment bank has issued a request for information to explore digital asset custody, as CoinDesk previously reported.

Waldron said that while the bank can custody digital assets, it “can’t principle” them and added Goldman was discussing with watchdogs how banks should be regulated in regards to digital currency, according to the report.

The executive also said Goldman believes online commerce spurred by coronavirus pandemic-related buying will continue and cause an “explosion” in the use of digital currency.

Related: OpenZeppelin’s ‘Defender’ Gives DeFi Teams a Weapon Against Flash Loan Attacks

“There is no question in our mind there will be more digital commerce … and [use of] digital money.”

See also: Goldman Digital Asset Lead Sees Mergers Ahead for Crypto Infrastructure Providers

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Planned ETF Would Invest in Grayscale’s GBTC to Sidestep SEC’s Crypto Reluctance

5 years 7 months ago

A new exchange-traded fund (ETF) proposal seeks a way to allow institutional investors to get involved in the world of cryptocurrency even though the U.S. has so far blocked all attempts to list a bitcoin ETF.

According to a prospectus filed with the U.S. Securities and Exchange Commission (SEC) on Tuesday, the Simplify U.S. Equity PLUS Bitcoin ETF would invest in cryptocurrency indirectly via the Grayscale Bitcoin Trust (OTCQX: GBTC), as well as equity securities of U.S. companies.

Up to 15% of the fund, from New York-based Simplify Exchange Traded Funds, would be invested in bitcoin, solely through the $35 billion Grayscale Bitcoin Trust, with the remainder in equities.

Related: Goldman Sachs Says Client Demand for Bitcoin is ‘Rising’

If approved, the ETF would trade on the Nasdaq under the ticker “SPBC,” and have a management fee of 0.5%. BNY Mellon would be the ETF’s administrator, transfer agent, asset custodian and accountant.

In its investment strategy section, the Simplify prospectus states:

The Fund expects to gain exposure to cryptocurrencies indirectly by investing up to 15% of its total assets (measured at the time of investment) in a wholly-owned and controlled subsidiary, which is designed to enhance the ability of the Fund to obtain exposure to cryptocurrencies consistent with the limits of the U.S. federal tax law requirements applicable to regulated investment companies.

The Grayscale Bitcoin Trust is the world’s largest bitcoin fund, offering investors the opportunity to gain regulated exposure to the leading cryptocurrency without having to take direct control of assets.

Related: Arianee, Early Pioneer of NFTs for Luxury Provenance, Raises $9.5M

The latest figures show Grayscale Investments – owned by CoinDesk’s parent firm, Digital Currency Group – currently has $42.1 billion in net assets under management across all its cryptocurrency trusts and funds.

The SEC has yet to approve a bitcoin ETF, having shot down a host of hopefuls in recent years. Most recently, VanEck made another attempt to persuade the SEC that now is at last is the time, with a filing in December.

Canada, on the other hand, recently approved three bitcoin ETFs, all of which listed on the Toronto Stock Exchange.

Read more: Grayscale, Firm Behind Leading Bitcoin Trust, Is Hiring ETF Specialists

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Arianee, Early Pioneer of NFTs for Luxury Provenance, Raises $9.5M

5 years 7 months ago

Arianee, an Ethereum-based project for tracking the provenance of luxury brands, has completed a $9.5 million seed funding round, raised from a mixture of equity and token sales.

Notable investors include Bpifrance, the French Public Investment Bank, which is linked to the French government; and ISAI fund, France’s leading seed investment company.

It turns out blockchain-based watermarks, or digital passports, to verify the authenticity of luxury items like high-value watches are a solid use case for the technology, often using the concept of non-fungible tokens (NFTs) that are currently very much in vogue. 

Related: Goldman Sachs Says Client Demand for Bitcoin is ‘Rising’

Arianee, which recently partnered with watchmaker Breitling, and whose technology is being used by Switzerland-based luxury brands conglomerate Richemont Group, did not come down with the last shower of NFTs, and has been working on its product for years. Also quietly exploring NFTs as proof of authenticity is LVMH, the French firm that owns brands like Louis Vuitton, Dior and Tiffany.

The Arianee seed round will help create a track-and-trace software-as-a-service (SaaS) offering. Previously, the startup did a token sale in 2018 and raised a little over 300 bitcoin, according to Arianee co-founder Luc Jodet. (The bitcoin raise is worth $17.1 million at current prices, though some has surely been spent.)

“It’s significant that an entity such as Bpifrance, which is partly funded by the government and also public savings, has touched tokens,” Jodet told CoinDesk in an interview. “Finally, a French public entity is recognizing the fact that tokens are something that you can invest in.” 

Other investors included Cygni Labs, Noia Capital and a clutch of French tech entrepreneurs. All investors in the round are exposed to the ARIA20 utility token in addition to equity, said Jodet.

Related: Planned ETF Would Invest in Grayscale’s GBTC to Sidestep SEC’s Crypto Reluctance

“Arianee is reinventing the customer relationship with fashion and luxury goods players through a unique value proposition based on the digital identity of an item,” Bpifrance’s Guillaume Simonaire said in a statement. “Bpifrance is very proud to support this French solution which will contribute to the acceleration of the digital and ecological transformation of our industry.”

NFTs, which seem to be at the heart of crypto’s latest retail renaissance, are a key part of the Arianee architecture, which the firm built some four years ago. 

Jodet said Arianee is exploring some test demos around NFTs and digital fashion, but for the most part, the focus remains firmly on the company’s provenance-tracking use case.

“Hype cycles will come and go,” Jodet said. “We have seen this before on other bull runs with ICOs, for instance, and I think the NFT sphere is in crazy land at the moment.”

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JPMorgan’s New Crypto Bond ‘Not for the Faint of Heart,’ Former Star Analyst Hintz Says

5 years 7 months ago

Like a lot of Wall Street’s alchemical “structured products,” JPMorgan Chase’s new cryptocurrency-focused bond is full of arcane risks – many of them detailed in the fine print in the largest U.S. bank’s 18-page regulatory filing on the newfangled financial offering.

Daunted by the prospect of dissecting the instrument on our own, CoinDesk turned to the smartest person we could think of to undertake the effort: Brad Hintz, an adjunct finance professor at New York University and former top-ranked brokerage-firm analyst for Sanford Bernstein, itself among the best-of-the-best when it comes to investment research. Before that Hintz served as corporate treasurer for Morgan Stanley and CFO for Lehman Brothers (in the good times). 

In other words: He understands what to make of complicated financial instruments like these, and how to think about them. Here’s what he wrote back, via a message on LinkedIn:

Related: Market Wrap: Bitcoin Nears All-Time High As US House Passes $1.9T COVID-19 Relief

***

Looks like a remarkably entertaining pricing supplement of a medium-term note program. 

Needless to say, the note is wager on a basket of stocks that may or may not track the cryptocurrency market, with a 150 bp cushion for the issuer built in. Note the payout on a $1,000 note is equal to ($1,000 × (1 + Basket Return – Basket Deduction), and defines the Basket Deductions as 1.50%).

As the prospectus says, the basket of reference stocks will be set at an Initial Basket Value of 100.00 at pricing. If there is no movement in the reference stocks over the life of the issue, the buyer of the notes will incur a 1.5% loss on the investment.

Related: ‘Moon’ Uses Bitcoin’s Lightning Network to Enable Online Shopping With Visa Cards

If you look at the graph in the prospectus pricing supplement, the payout looks like that of a long futures contract. If the price of the commodity goes up, you win. And if it goes down or stays the same, you lose. In this case the wager is on a group of stocks that are expected (but not guaranteed) to track the cryptocurrency market.

Let’s look at the risks:

  • If this is a bet on the cryptocurrency market, then the basket may not perform as expected. A quick ‘ocular’ regression doesn’t imply a tight fit between either MicroStrategy’s stock price or Riot Blockchain stock and the price of bitcoin!
  • If the overall market declines or goes flat, an investor in this note is toast. If you follow the link at the bottom of the page of the pricing supplement you can see that the pricing supplement is just one of a series of notes issued by JPMORGAN CHASE FINANCIAL COMPANY LLC and guaranteed by JPM. The guarantee is important, since it ensures that the note has the same ratings as JPM and that implies that the buyer wanted a security (not an OTC derivative) with relatively high ratings to add to a portfolio in order to add some exposure to crypto currencies.

Structured products like this are typically engineered for specific investors who don’t want an OTC derivative contract that could easily deliver the same return characteristics as the note.

Why might some investor want to own a “highly engineered” bond and not an OTC derivative? A couple of ideas come to mind:

  • Investment Guidelines – Perhaps the buyer is prohibited from holding OTC derivatives – like some insurance companies or pension plans.
  • Creditworthiness – Perhaps the buyer is not acceptable as a derivative counterparty. In other words, the buyer’s name is unacceptable as a counterparty to JPM’s credit staff. Like a leveraged hedge fund.
  • Investor Risk Appetite – In a frothy market with lots of enthusiastic investors ignoring risk, there are bond investors tired of zero interest rates who might want some crypto risk to juice up potential returns.

In any case this investment is not for the faint of heart. Instead of buying this issue, wouldn’t it be easier and more fun to just write a check to (JPMorgan CEO) Jamie Dimon and then hop on a plane for a weekend in Las Vegas?

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Market Wrap: Bitcoin Nears All-Time High As US House Passes $1.9T COVID-19 Relief

5 years 7 months ago
  • Bitcoin (BTC) trading around $56,248.28 as of 21:00 UTC (4 p.m. ET). Climbing 3.54% over the previous 24 hours. 
  • Bitcoin’s 24-hour range: $53,101.24-$57,336.75 (CoinDesk 20)
  • BTC trades above its 10-hour and 50-hour averages on the hourly chart, a bullish signal for market technicians.

Bitcoin gained for a sixth straight day, extending its longest winning streak of the year and approaching the record high price reached last month. 

The largest cryptocurrency was changing hands above $56,000, up about 3% on the day, and within range of a quick run to the all-time high of $58,332. 

“We continue to see strong upward momentum from technicals,” Gary Pike, director of sales and trading at institutional cryptocurrency trading platform B2C2 USA, told CoinDesk. “One should not be surprised for bitcoin to test the old highs and potentially break through.”

Related: How Will Biden’s $1.9T Stimulus Package Impact Bitcoin?

The day’s gains came amid fresh evidence of two big bullish market drivers over the past year: Bitcoin’s increasing use as a hedge against inflation in the face of trillions of dollars of economic stimulus, and its increasing adoption by big institutional buyers. 

Read more: Grayscale Halts New Investments in GBTC After Trading at 15% Below Bitcoin

The U.S. House of Representatives on Wednesday passed a $1.9 trillion coronavirus relief bill, already passed by the Senate, that has been a priority of President Joe Biden’s early days in office. Some economists say the extra money could quickly reheat the economy, spurring a fast rebound in consumer demand and employment that might rapidly lead to price increases. 

Crypto analysts noted that the average “funding rates” on the bitcoin perpetuals – a fee traders pay for leverage within derivatives contracts – has started to tick back up  in an indication that markets are turning  more bullish, the Norwegian firm Arcane Research wrote Tuesday in a weekly report.

Related: ‘Moon’ Uses Bitcoin’s Lightning Network to Enable Online Shopping With Visa Cards

But that is still far from the unsustainable level the market saw in late February, which led to a correction due to liquidations of over-leveraged traders.

Trading volume on the spot market, meanwhile, was flat on Wednesday, showing the market has yet to return to the euphoric frenzy witnessed earlier in the year.  

“If we think about the volume as energy, and if the buyers only display low energy, then how can they keep advancing the price?” Chris Thomas, head of digital asset at Swissquote Bank, said. “We really need another few [large buy orders] to move us all forward with more energy.”

Read More: Norway-Listed Aker to Put 100% Bitcoin in Treasury Reserves of New Investment Unit

Ether futures open interest jumps

Ether (ETH), the second-largest cryptocurrency by market capitalization, was down on Wednesday, trading around $1,803.34 and sliding 1.56% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

Ether’s futures open interest is near $6 billion on Wednesday, a 30% jump from last Friday, according to Jason Lau, chief operating officer at San Francisco-based crypto exchange. The number is approaching its all-time high at about $7 billion, reached on Feb. 19.

At the same time, the amount of ether staked on Ethereum 2.0 has crossed the 3% threshold of total circulating coin supply, as CoinDesk reported earlier today, meaning 3% of all ether in existence will not be available for use other than staking on Eth 2.0 until sometime in the future.

Read More: Valid Points: Why Ether Doesn’t Need a Supply Cap to Hedge Against Inflation

While the excitement around Eth 2.0 and the Ethereum Improvement Proposal (EIP) 1559 has helped ether regain price strength from its recent price dip, for now ether is still largely moving in tandem with bitcoin, Lau said.

Other markets

Digital assets on the CoinDesk 20 are mostly in red Wednesday. The notable winner as of 21:00 UTC (4:00 p.m. ET): 

Notable losers:

Equities:

  • Asia’s Nikkei 225 closed nearly flat, up 0.030%.
  • The FTSE 100 in Europe closed in the red 0.070%.
  • The S&P 500 in the United States closed in the green 0.60%.

Commodities:

  • Oil was up 1.20%. Price per barrel of West Texas Intermediate crude: $64.78.
  • Gold was in the green 0.54% and at $1724.62 as of press time.

Treasurys:

  • The 10-year U.S. Treasury bond yield fell Wednesday dipping to 1.523%.
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Israeli Pension Giant Put $100M Into Grayscale Bitcoin Trust: Report

5 years 7 months ago

Israeli pension company Altshuler Shaham has sunk $100 million into the Grayscale Bitcoin Trust (GBTC), according to reports in the local press.

Altshuler Shaham is one of the largest investment houses in Israel, with over $50 billion in assets under management. The firm made the investment into GBTC in the second half of last year, when bitcoin was trading at around $21,000, according to the report.

The revelations come at a time when institutional investors are scrambling to get exposure to cryptocurrency, either directly or at arm’s length via funds like Grayscale’s. 

Related: Market Wrap: Bitcoin Nears All-Time High As US House Passes $1.9T COVID-19 Relief

The Grayscale Bitcoin Trust launched in 2013 is the world’s largest bitcoin fund, offering investors the opportunity to gain exposure to the leading cryptocurrency. Grayscale is owned by Digital Currency Group (also the parent of CoinDesk). 

According to its latest figures, Grayscale currently has $42.1 billion in net assets under management across all its cryptocurrency trusts and funds.

Grayscale recently halted inflows to the GBTC after the fund traded at a 15% discount to the price of the bitcoin the trust holds.

In addition to buying shares in Grayscale, Altushler is known to have taken an interest in some Israeli initial coin offerings back in 2017, according to a source familiar with the company.

Related: ‘Moon’ Uses Bitcoin’s Lightning Network to Enable Online Shopping With Visa Cards

“Altushler has an alternative assets department that has ETH and BTC wallets. They were active in the past at some degree, and are looking into space again,” the source said. 

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Bitcoin on the Balance Sheet? Corporate Buying Might Become a Global Trend

5 years 7 months ago

Bitcoin and ether purchases by companies in Scandinavia and Hong Kong are fueling speculation a wave of non-U.S. corporate treasurers might follow MicroStrategy, Tesla and Square into buying cryptocurrencies, according to a new report by the Norwegian analysis firm Arcane Research.

Hong Kong-listed Meitu, a maker of photo-retouching software, said it bought 15,000 ETH and 379 BTC in open-market transactions last week. Arcane figures the company paid an average $47,230, well below the current market level of around $57,000.

In addition, on Monday Aker, a Norwegian energy engineering company, added 1,170 BTC to its balance sheet, paying approximately $58 million, at an average price of around $49,600.

Related: Market Wrap: Bitcoin Nears All-Time High As US House Passes $1.9T COVID-19 Relief

According to Arcane, the new corporate buyers appear intent on keeping the cryptocurrencies for the long term “and see further upside potential in bitcoin.” MicroStrategy, led by CEO Michael Saylor and based in Virginia, holds about 91,064 BTC purchased over the past three months, now worth about $5 billion. Meanwhile the U.S. electric-vehicle maker Tesla, headed by billionaire Elon Musk, bought about $1.5 billion worth of bitcoin in February..

“The first wave, initiated by MicroStrategy, started in the U.S., but now the trend shows signs of turning global,” Arcane wrote.

With bitcoin firmly in a bull run, quadrupling in price last year and nearly doubling in price already in 2021, the sooner a company got into the market, the better a price it got – as illustrated by Arcane’s chart below.

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Record-Breaking $1.9T Relief Bill Passes US House, Heads to Biden’s Desk

5 years 7 months ago

The U.S. House of Representatives passed a $1.9 trillion relief bill on Wednesday, sending the bill to President Joe Biden’s desk for his signature. 

The bill, already passed by the Senate, has been the subject of heated debate among policymakers and economists who are concerned about inflation when the coronavirus pandemic-wrecked economy recovers. 

The financial relief is expected to contribute to temporarily high inflation that may occur when most Americans are vaccinated and able to begin traveling and spending the way they did prior to when COVID-19 restrictions were put in place. 

Related: Market Wrap: Bitcoin Nears All-Time High As US House Passes $1.9T COVID-19 Relief

Bitcoiners have touted the stimulus as an opportunity for the limited-supply digital asset to shine as a hedge against inflation. The Federal Reserve has said it doesn’t expect the economy to reach the central bank’s target of 2% inflation, on average, until at least 2023. 

The bill is unlikely to affect the price of bitcoin, said Steven Kelly, a research associate at the Yale Program on Financial Stability.

“Given markets have known the payments were going to be hitting folks’ accounts soon, I don’t know that’ll we see some unexpected jump in bitcoin or other risk assets,” Kelly said. “Not least because there is still a lot of economic pain out there. These checks will go toward filling that gap first and foremost. I don’t expect this to be a government funding of the retail investor army by any means, though I’m sure some anecdotes will come out to that effect.”

Also today, according to a report in the Washington Post, Democrats in Congress are considering a bill that would counter China’s economic influence by increasing U.S. production of semiconductors.

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