Category Archives: wall street

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Digital US Dollar Launched by Goldman Sachs-Backed Startup

A new cryptocurrency by fintech startup Circle, a company backed by Wall Street giant Goldman Sachs, is aiming to be a digital version of the US dollar, writes the Independent.

Circle has announced that the new USD Coin will be free from volatility issues due to it being pegged to US dollar, offering it a stable value in order for it to be used as a working currency, rather than just an investment tool, the company says. Circle also claim it will be a faster and more secure version of the US dollar.

The underlying technology behind the proposed USD Coin will not be decentralized peer to peer, as it’s backed by fiat currency and released by a major financial institution, although it will be an electronic cash system, according to the company.  People will also not be able to mine the USD Coin in the same way other cryptocurrencies can be generated, as the only way to acquire them is to buy them.

It is the second cryptocurrency-related announcement from Goldman Sachs in the space of a month, following news that the bank had plans to open its own crypto trading desk on behalf of its clients. The startup clearly views the backing of Sachs as a huge driver of the project, commenting on its blog post:

“Existing fiat-backed approaches have lacked financial and operational transparency, have operated in unregulated jurisdictions with unknown banking and audit partners, and have been built as closed-loop ecosystems and closed proprietary technologies.”

Matthew Newton, analyst at crypto retailer eToro, sees the move as inevitable, suggesting that this has been coming:

“This shouldn’t come as a huge surprise to anyone who has been paying attention to cryptocurrencies over the last 18 months. Any forward-looking financial institution needs to understand this technology and accept its enormous potential.”

Newton goes on to argue that big banks have been investing in research and development of blockchain and cryptocurrency for some time. The trading platform will be the first of any major Wall Street institution and is expected to add further legitimacy, particularly following so close after Goldman Sach’s Bitcoin futures announcement last month.

There is a suggestion that the company may announce cryptocurrencies tied to other traditional currencies in the future, such as the pound and the euro.

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BitGo Offers New Crypto Custodial Products for Financial Firms

BitGo has released a new suite of cryptocurrency custodial products aimed at Wall Street financial firms. It is claimed that 15% of Bitcoin transactions occur through BitGo’s wallet services, with BitGo software processing over USD 10 billion of cryptocurrency transactions per month. BitGo is seeking to attract USD 20 billion that it expects institutional investors to commit to cryptocurrency.

Institutional clients like hedge funds and stock brokerage firms require a custodian service that follows all of the laws and is properly regulated before they are willing to invest money. This is why BitGo acquired the Kingdom Trust Company as well as Kingdom Services earlier this year.

Kingdom Trust is a licensed qualified custodian regulated by the South Dakota Division of Banking which has over 100,000 clients with over USD 12 billion of assets. Using Kingdom Trust’s infrastructure, BitGo will offer legal and trustworthy custodianship of cryptocurrency assets, giving big investors and firms peace of mind when deciding to add cryptocurrency to their portfolio. The acquisition of Kingdom Trust still has to be approved by government regulators, but that hasn’t stopped BitGo from launching services managed by Kingdom Trust.

Having a trustworthy custodian makes cryptocurrency investment easier for investors, since they don’t have to deal with any of the technical details. They simply send their money to BitGo with an order for which cryptocurrencies they want, and BitGo takes care of buying the cryptocurrency on an exchange and securely storing it in a wallet.

Currently, BitGo supports 20 different cryptocurrencies and is looking to add even more so that it eventually provides custodial services for every cryptocurrency it deems worth investing in. BitGo offers three tiers of service: qualified custody where cryptocurrency is stored and secured with Kingdom Trust, institutional custody where clients manage BitGo wallets, and completely self-managed custody. This range of services provides solutions from consumer to institutional needs.

The value of all cryptocurrencies combined is worth just over USD 400 billion as of this writing, and has been growing by orders of magnitudes the past several years. BitGo’s custodial services open up cryptocurrency to big investors like never before and will provide a conduit for money to pour into the cryptocurrency market from Wall Street. Trillions of dollars are invested in the stock market, and BitGo’s services will facilitate some of that money to be diverted into cryptocurrency.

 

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Bitcoin at over $100,000 Says Wall St Veteran Max Keiser

In a conversation with Bitcoinist, Max Keiser, American broadcaster, filmmaker and Wall Street Veteran, has said that he envisages that the crypto giant Bitcoin “will top USD 100,000”.

Timothy Maxwell ‘Max’ Keiser currently hosts the Keiser Report on Russian state media channel RT. Until 2012, Keiser anchored the news analysis program On the Edge on Iran’s Press TV. Elsewhere, he has hosted business analysis programmes for BBC Radio 5 and BBC World News and produced the TV series, People and Power, for Al-Jazeera.

Keiser was quick to point out in the interview that his show was the first to cover Bitcoin back in 2011, arguing that it “fulfills Aristotle’s 4 conditions of money nicely”.  It must be durable, portable, divisible (have fungibility) and it must have intrinsic value.

Keiser maintains that with extremely low interest rates prevailing around the world, there is absolutely no incentive to save. Thus, due to poor investment practices and a “horrendous capital allocation trend”, an unsustainable bubble has been created: “an economy of artificially inflated stocks, bonds, property, and art”. He maintains that Bitcoin, along with gold, remain outside this bubble, although he sees altcoin Bitcoin Cash as “dodgy”, riding on the back of Bitcoin’s success.

Recent developments and comments surrounding investor and magnate George Soros and The Rockefellers were seen by Keiser as evidence that futures contracts could be used to build much bigger positions. He sees George Soros attempting to “corner” the bitcoin market, borrowing at 0% and accumulating “a huge position”.

In this scenario with the added financial impetus offered by big players, Keiser says Bitcoin can only go “a lot higher”, predicting a long-term target for the virtual currency of USD 100,000, based on “a Soros dump”.

Apart from Keiser’s appearances he has appeared as a financial pundit on a number of news networks. He was the creator, founder and CEO of HSX Holdings/Hollywood Stock Exchange and co-invented the Virtual Specialist platform on which the Hollywood stock exchange operates. The technology allowed traders to exchange virtual securities such as the Hollywood Dollar.

 

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DealBook – Winklevoss Bitcoin Trust

DealBook – Winklevoss Bitcoin Trust:

NY Times financial reporters Nathaniel Popper (@NathanielPopper) and Peter Lattman (@PeterLattman) broke the news that the Cameron and Tyler Winkelvoss have filed with the SEC a proposal to create a Bitcoin exchange-traded fund.  Excerpts:

“The plan involves an exchange-traded fund, which usually tracks a basket of stocks or a commodity, but in this case would hold only bitcoins.”

“The Winklevoss Bitcoin Trust could send digital money from the realm of computer programmers, Internet entrepreneurs and a small circle of professional investors like themselves into the hands of retail investors — virtually anyone with a brokerage account.”

“‘The trust brings bitcoin to Main Street and mainstream investors to bitcoin,’ said Tyler Winklevoss, co-founder of Math-Based Asset Services, which would operate the proposed fund.”

“Their proposal has the advantage of coming from the desk of Kathleen Moriarty [who had] a leading role in the creation of the first exchange-traded fund and popular gold- and silver-backed E.T.F.’s.”

“The Winklevosses [previously] went public with their own bitcoin hoard, amounting to about 1 percent of all outstanding coins, or about $10 million.”

“An exchange-traded fund would make it significantly easier to gain exposure to bitcoins, just as commodities-based funds have made investing in gold, silver and other precious metals more accessible.”

“The Winklevoss fund would buy one bitcoin for every five shares, making the value of a single share worth about a fifth of a single bitcoin.”

“‘Digital currencies are not going away,’ said Carol Van Cleef, the head of law firm Patton Boggs’s emerging-payments practice.”

 – http://nyti.ms/1cK00Ys
 – http://1.usa.gov/13i07w0 (Proposal / S-1 Registration Statement)
 – http://bitcointalk.org/index.php?topic=248013.0 (Further discussion)

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