In the crypto bull market of late 2017, when tokens reached a valuation of tens of billions of dollars, blockchain networks comfortably surpassed the valuation of commercial companies in the cryptocurrency ecosystem.

At the time, for venture capital investors, direct investments in digital assets and cryptocurrencies seemed substantially more profitable than early-stage funding rounds in startups like CoinbaseBinance, and Circle. These companies have since become behemoths in the cryptocurrency sector, achieving multi-billion dollar funding valuations with profitable and stable business models.

Are Crypto Startups Better Investments Than Blockchain Projects?

In November of last year, retail traders and individual investors triggered an unforeseen short-term rally of cryptocurrencies, allowing the market to collectively reach a valuation of over $800 billion.

However, as CoinShares executive Meltem Demirors explained, institutional investors are more interested in investing in the market through investment vehicles that are stable and regulated.

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As of current, the vision of mega-successful crypto companies like Coinbase and Binance is quite clear; to improve the adoption of digital assets and strengthen the infrastructure of the cryptocurrency exchangemarket.

To institutional investors and large accredited investors, indirect investments in the crypto market are more appealing, partially because blockchain projects, decentralized initiatives, and initial coin offerings (ICOs) have been struggling to remain relevant and to establish a clear vision.

“Many crypto projects that raised money through an ICO face massive challenges to stay relevant and create real purpose. for now, our collective hopes and fears are expressed as speculative price moves. projects don’t die the way companies do, and the arc of time is long,” Demirors said.

Given that institutional investors and venture capital firms favor new companies building infrastructure rather than digital assets with unproven business models, in the short-term, companies are expected to outperform most projects in the global market.

“Most investors aren’t going out and buying crypto directly, nor will they do so anytime soon (sorry) that ‘institutional herd’ is getting exposure through existing investment vehicles that they know and understand (even if the assets are new and strange) more and more traditional financial institutions are looking at crypto as a way to: 1. create new revenue streams 2. play ‘innovation’ theater 2. build enterprise value.”

The majority of tokens in the market have also failed to maintain active GitHub repositories, with low double-digit code commits recorded last quarter and hundreds of daily on-chain transactions.

Could the Trend Change?

Chart shared by Meltem Demirors and CoinShares

In the long-term, as the mainstream opens up to decentralized systems and institutions begin to see value in blockchain projects, Demirors stated that a trend reversal is inevitable.

“If the next five years are anything like the last, expect value to flow from centralized corporate entities to less centralized networks and applications. we can’t pinpoint when that shift will happen, but here at CoinShares- we believe it’s inevitable.”

There exist a few key factors that could drive an increasing amount of investment in the blockchain space. In the upcoming months, if major markets like the US, Japan, and South Korea establish clear guidelines to regulate and govern the ICO market, it could open a regulated channel for institutions to invest in the market in a secure and stable manner.

This post credited to ccn Image from Shutterstock

At a meeting with the US Securities and Exchange Commission (SEC) commissioner Elad L. Roisman, representatives from SolidX, VanEck, and CBOE presented five major reasons why the commission should approve the Bitcoin exchange-traded fund (ETF) filing of VanEck and SolidX.

VanEck, an investment management firm headquartered in New York that has decades of track record in the traditional finance sector and hundreds of ETFs filed under its name, outlined the following points the SEC should consider in approving its Bitcoin ETF:

  1. There now exists a significant regulated derivatives market for bitcoin
  2. Relevant markets – CBOE, bitcoin futures, OTC desks – are regulated
  3. Concerns around price manipulation have been mitigated, consistent with approval of prior commodity-based ETPs
  4. CBOE’s rules are designed to surveil for potential manipulation of Trust shares
  5. Promotes investor protection

Significant Volume and Trading Activity in the Futures Market

Previously, the SEC rejected the Winklevoss Bitcoin ETF primarily due to its reliance on a public cryptocurrency exchange in Gemini to find the base price of BTC. The SEC deemed cryptocurrency exchanges to be insufficiently regulated and liquid to handle an ETF.

As a response to the rejection of the Winklevoss Bitcoin ETF, ProShares and two other companies filed 9 ETFs, basing the BTC price of the ETFs on the futures market operated by CBOE and CME Group. At the time, the filling of ETFs by the three companies was considered a smart move as it considered the SEC’s concerns regarding cryptocurrency exchanges.

However, the SEC rejected the 9 ETFs and stated that the futures market is not of significant size to support an ETF.

SEC cryptocurrency regulation

During its presentation, VanEck, SolidX, and CBOE representatives told the SEC that the futures market is able to handle the operation of an ETF through the Depository Trust & Clearing Corporation (DTCC), which was especially relevant given the involvement of CBOE in the filing.

VanEck also emphasized that the approval of an ETF would reduce counterparty risk for investors and it would provide a simple solution for investors seeking price exposure, by increasing the stability of the market.

“As of now, no CCPs support the clearing of bitcoin Investors are left facing absolute counterparty risk. Such risks are often unacceptable to many investors An ETF provides a straightforward solution for investors seeking price exposure without facing counterparty risk, as the ETF would be cleared through DTCC Furthermore, in creations and redemptions, the Trust always requires APs and trading counterparties to settle their leg of the trade before the Trust will do so.”

The claim of VanEck directly supports the statement of SEC commissioner Hester Peirce, who previously stated that the current structure of the cryptocurrency exchange market only allows a selected group of investors with specific know-how and knowledge in the market to trade and benefit off of the liquidity in the market.

“This complexity means that only a very particular type of investor can pursue the diversification opportunities such assets can provide. Entrepreneurs are developing new products through which people can access cryptocurrencies indirectly or hedge their cryptocurrency holdings. Bitcoin futures, for example, began to trade recently,” she explained.

VanEck Has the Highest Chance

Throughout the past several months, analysts have given VanEck and SolidX the strongest chance of having an ETF introduced in US markets given the history of VanEck in successfully filing hundreds of ETFs with the SEC.

This post credited to ccn Images from Shutterstock

Another of the world’s largest investment banks is quietly building a product that will allow its clients to trade bitcoin, at least indirectly.

Citing a person familiar with the matter, Bloomberg reports that Morgan Stanley, the sixth-largest bank in the U.S. by assets, is creating a proprietary derivatives product that will give traders “synthetic exposure” to the price of bitcoin.

From the report:

“The U.S. bank will deal in contracts that give investors synthetic exposure to the performance of Bitcoin, said the person, who asked not to be identified because the information is private. Investors will be able to go long or short using the so-called price return swaps, and Morgan Stanley will charge a spread for each transaction, the person said.”

The report further indicated that Morgan Stanley, whose CEO — James Gorman — said earlier this year that the firm won’t let customers trade cryptocurrency directly through the bank, is “technically prepared” to begin offering these bitcoin swaps, pending the completion of an internal approval process and demand from institutional investors.

CCN earlier reported that Morgan Stanley had poached Credit Suisse’s “bitcoin expert,” Andrew Peel, to head its new crypto division.

The bank joins a growing number of major financial institutions that are said to be evaluating how best to integrate cryptocurrencies into their institutional product lines. Both Goldman Sachs and Citigroup, the fourth- and fifth-largest U.S. banks, respectively, plan to offer bitcoin derivatives products to their clients. JPMorgan has reportedly also begun exploring ways to help its clients invest in cryptocurrency, despite the fact that CEO Jamie Dimon has been one of bitcoin’s most vocal critics.

Meanwhile, Intercontinental Exchange (ICE), the operator of the world’s largest stock exchange, will soon launch the first physically-delivered bitcoin futures product, meaning that contracts will be settled in actual BTC rather than cash (as is the case with the bitcoin futures products currently available on Chicago-based exchanges CME and CBOE).

This post credited to ccn  Featured Image from Shutterstock

Digital asset minding company Kingdom Trust announced today that it has secured insurance coverage through Lloyd’s of London. The insurance is to protect investor assets against theft, destruction, and loss.

Kingdom Trust is a qualified custodian of over 30 cryptocurrencies and holds assets valuing $12 billion USD.

Mainstream Involvement

The announcement today has made investors sit up, as it is seldom that mainstream financialinstitutions get involved with the volatile and unregulated crypto industry; large banks rarely, if ever, handle cryptocurrency.

Is Llyod’s Ahead of the Game?

The fact that Llyod’s is offering protection of Kingdom Trust’s assets is a sign of the growth of cryptocurrency business and concern for its volatility may just be outweighed by the potential of massive financial gains.

Perhaps Llyod’s for one is throwing caution to the wind, aiming to be the first to jump on what will no doubt be a lucrative new crypto-industry: cryptocurrency insurance.

For investors, mainstream involvement is an important factor in this industry as it signals a greater adoption of the currency and an acceptance for a move away from traditional fiat currencies.

But there is Danger

However, the reality is that the crypto industry has seen billions of dollars worth of cryptocurrency lost through exchange hacks, corrupt deals, fraud, and even simple technical errors. It is an understandably difficult measure to insure.

Some losses have been so extensive that it results in the complete closure of an exchange, for example.

>> ICON Surges this Week—Growing 25%, Read About This Altcoin Here!

Kingdom Trust

According to its website, Kingdom Trust is qualified under US financial regulations to hold assets on behalf of investment advisers, securities brokers, and retirement plans.

The company is regulated as a trust company by South Dakota and has been on the search for an insurer since 2010:

“From the very beginning, we saw insurance as a key factor to bring institutional investors into the marketplace.”

It stores over 30 digital assets, including Bitcoin, Ethereum, Litecoin, Ripple, and ZCash.

What do you think? Is Lloyd’s doing something clever here? The institute has yet to comment on the matter itself, so it’s hardly screaming from the rooftops about it.

What does that say?

 

This post is credited to cryptocurrencynews  Image source: Google Images

Coil, a new company founded by Ripple’s former chief technology officer Stefan Thomas, has launched a closed beta.

The project – which aims to allow web content creators to better monetize their work – was announced in May, when Thomas departed Ripple. In an interview, Thomas detailed the closed beta, describing the initiative as a way to level the playing field for content creators.

“If you’re big you can have a subscription service like Netflix or Spotify. If you’re big you can collect enough data about people to make a lot of money with ads like Facebook or Google,” he said, going on to add:

“If you’re small it’s actually very hard right now to make money on the web.”

Coil has not announced the beta publicly, Thomas said, though it has begun inviting certain select parties (those interested can sign up here).

Thus far, few websites have joined the platform, he continued, noting that “we did some passive integrations with some sites like Wikipedia, Youtube, Twitch.”

While at Ripple, Thomas co-created Interledger, an interoperability protocol that facilitates payments across different networks. This technology, which is open source, is now being used as the basis of Coil.

Thomas also helped to create Codius, a smart contract platform that Ripple developed- in-house but ultimately shelved in 2015 due to technological challenges and a lack of compelling use cases. In June, however, Thomas revealed that Codius would be incorporated into Coil.

Coil allows readers, watchers and listeners to compensate content creators through micropayments. It’s a model that has been tried multiple times in the industry, including the browser-focused startup Brave, which raised $35 million in an ICO last year. Thomas also cited Patreon and Flattr, but highlighted an important aspect that distinguishes Coil.

With Coil, he said, “you’re getting paid in real time,” allowing content creators to explore new business models.

“You can now make a service where maybe you need to rent a server for every user that comes by,” he explained, adding that other possibilities include downloading or uploading a file, sending an SMS, or streaming music that triggers a licensing fee.

“The website gets the money instantly as you’re on the website, so they can actually react to it and provide extra services,” Thomas said, concluding:

“That’s never been possible before, so we’re excited to see what people build with that.”

Coil image by Guillaume de Germain via Unsplash

This post is credited to coindesk