Monthly Archives: July 2021

Big Investors Are Pushing up Valuations of Crypto Firms

Big Investors Are Pushing up Valuations of Crypto Firms

Venture capital firms and large investors are driving up the prices of crypto startups. Boutique investment firms and family offices are being elbowed out by big venture capital firms, private equity funds, and even some pension funds.

VC Firms Driving Up Prices of Crypto Startups

Cryptocurrency firms are seeing high valuations due to large investors entering the space, according to Henri Arslanian, Crypto Leader at professional accounting and financial services firm PWC, also known as Pricewaterhousecooper.

In an interview with Bloomberg Thursday, the executive explained that boutique investment firms and family offices are being elbowed out by big venture capitalists, private equity funds, and even some pension funds. He noted that smaller venture capital firms are unhappy about this trend. Arslanian described:

Let’s say they’re looking at a deal and they believe it’s worth $10 million, and you’re seeing large VCs come in and put a bid in for a higher valuation. This is happening a lot with very early-stage companies, say, $5 million to $20 million — the prices are being inflated.

According to the State of Crypto M&A 2021 report, even though deal activity in 2020 increased only 10% from the previous year, total deal value doubled to $1.7 billion. This was primarily due to a handful of large acquisitions in the crypto exchange space, including the $400 million acquisition of Coinmarketcap by Binance and FTX-Blockfolio transaction for $125 million. This trend has continued this year, with Galaxy Digital acquiring Bitgo for $1.2 billion.

In July, derivatives exchange FTX’s valuation rose to $18 billion after the company raised $900 million from investors. In addition, the Digital asset platform Fireblocks raised $310 million to achieve a value of $2 billion.

Arslanian explained that there are some challenges in pricing cryptocurrency startups. They include how to discount for regulatory risk in such a nascent industry and how to assess the valuation of businesses. There is also an issue of the lack of companies to invest in since most firms in the crypto space are still small and not well developed yet.

He further opined:

If your minimum ticket size is around $50 million, there aren’t that many companies that have that status yet. If you’re a large pension fund and you decided to make a crypto allocation, there are no more than two dozen companies around the world that are investable, looking for capital and could absorb $100 million.

What do you think about the comments by Arslanian? Let us know in the comments section below.

ETH Compatible BCH Sidechain Smartbch Successfully Launches Three Nodes

ETH Compatible BCH Sidechain Smartbch Successfully Launches Three Nodes

The day before the fourth Bitcoin Cash anniversary, the Smart Bitcoin Cash team (Smartbch), announced the project has launched three nodes as genesis validators. Smartbch disclosed that Btc.com, Viabtc, and Matrixport are participating and the project has officially started its voting period.

Smartbch Fires up Smart Chain’s Genesis Validators

For quite some time now, the Bitcoin Cash (BCH) community has been patiently waiting on the development of the Smartbch project. The reason for this is because Smartbch could unlock massive potential between Ethereum (ETH) and Bitcoin Cash.

The protocol could bolster decentralized finance (defi) on Bitcoin Cash and be compatible with the second largest crypto asset in terms of market capitalization. Bitcoin.com News first reported on Smartbch during the first week of April and interviewed the project’s lead developer 15 days later.

By the end of the month, Smartbch launched the testnet publicly and which gives developers and decentralized app makers the ability to experiment and develop with the high-performance, EVM-compatible Bitcoin Cash sidechain. Now Smartbch has now fired up its engines with three nodes acting as the genesis validators.

The three Smartbch nodes are operated by Viabtc, Matrixport, and Btc.com. “Smartbch is now in its first voting period,” the project’s announcement explains. “More validators will be elected by SHA256 miners and will take on the duty in the future.”

“We have spent two more months in development than the original estimation to finalize the data structure of MoeingADS and to implement SEP101, SEP206, and Transaction Reorder onto Smartbch,” the Smartbch development team adds.

“MoeingADS is the underlying storage engine for the world state, which is very hard to change in hard forks,” the Smartbch devs say. “Ethereum’s underlying storage engine MPT has never modified its data structure since the beginning. MoeingADS is now strong enough to support 51K TPS and can support Smartbch’s growth for many years without changing its primary data structure.”

Focusing on a Secure Cross-Chain Bridge

The Smartbch team says the project will take a lot of time to make the protocol robust. During the last few weeks, the developers noticed a number of defi projects that suffered from exploits and it was due to cross-chain bridge vulnerabilities.

The Smartbch team aims to strengthen the Bitcoin Cash sidechain’s cross-chain gateway so it is very secure and powerful. “It will take security as the priority and be audited by the community,” the Smartbch team says.

“The launch is a solid step in Smartbch’s long journey,” the project’s creators conclude. “We invite everybody from the BCH community to use it and help its growth. We’ll soon provide some guides for BCH holders to try it and transfer a limited amount of coins cross-chain through the current simple gateway.”

What do you think about Smartbch launching three nodes for genesis validators and the focus on the cross-chain bridge? Let us know what you think about this subject in the comments section below.

Kentucky Regulators Crack Down on Blockfi Interest-Bearing Accounts

Kentucky Regulators Crack Down on Blockfi Interest-Bearing Accounts

The crypto lender Blockfi is now dealing with regulators from five states as Kentucky has joined the fray against the firm’s Blockfi Interest Accounts (BIAs). On July 30, Blockfi shared a statement on Twitter that explained the Kentucky Department of Financial Institutions (DFI) has sent the company an order that aims to ban new BIA accounts.

Blockfi Now Has Problems With Regulators From 5 States

The New York City-based cryptocurrency finance company Blockfi was founded in 2017 by co-founders Zac Prince and Lori Marquez. The firm is a cryptocurrency lending firm that offers interest-bearing accounts called “BIAs” and also provides customers with a cryptocurrency-denominated credit card. Since January 2018, the company has allowed lending services that leverage crypto collateral.

Bitcoin.com News reported on Blockfi’s initial issues with New Jersey regulators which was followed by problems with Texas, Alabama, and Vermont. The regulators from all of the states take issue with the BIA products and statements indicate officials believe they might be unregistered securities.

Following the four states that sent notices to Blockfi, the Kentucky Department of Financial Institutions (DFI) sent the company an order, according to Blockfi’s official Twitter account.

“Friday afternoon we received an order from the Division of Securities of the Kentucky Department of Financial Institutions regarding the Blockfi Interest Account (BIA) operations in the state of Kentucky,” Blockfi’s message notes. The crypto lender’s message adds:

The order prohibits Blockfi from soliciting or offering ant securities in Kentucky. Blockfi firmly believes that the BIA is lawful and appropriate for crypto market participants. But in light of the order, Blockfi will stop accepting new BIA clients residing in KY immediately.

Much like the other four states, Blockfi cannot allow individuals to create new BIAs until the issues with regulators are solved. So far, no other crypto companies have been targeted for offering interest via crypto accounts. Blockfi’s statement on Friday further adds that current BIA customers in Kentucky were not affected and like the statements it made prior, Blockfi says it is in discussions with U.S. regulators.

“We remain steadfast in our commitment to protect consumers’ rights to earn interest on their crypto assets,” Blockfi’s message concludes.

What do you think about the issues Blockfi has with Kentucky and the four other states? Let us know what you think about this subject in the comments section below.

Central Bank Governor: South Africa’s Digital Currency Study Ongoing

South African Reserve Bank (SARB) governor, Lesetja Kganyago, has once again confirmed that the central bank is presently studying the feasibility of issuing a digital currency. In his remarks at the SARB’s annual general meeting, governor Kganyago suggested his organization has embarked on this study to keep abreast with the growing trend of central banks that are studying CBDCs.

Retail CBDC

In the past few years, several central banks including a few in Africa have similarly announced their CBDC studies. Already, the central banks of Ghana and Nigeria have both revealed they will start piloting their respective digital currencies in the second half of 2021.

However, as the recent Mybroadband report quotes Kganyago explaining, the SARB’s e-rand study will also seek to understand the feasibility of issuing the CBDC for retail purposes. Kganyago explained:

The objective of the study is to investigate if it would be feasible, appropriate and desirable for the SARB to issue a CBDC to be used for retail purposes, complementary to cash, in South Africa.

Crypto Regulation Imminent

Kganyago’s confirmation of SARB’s study of the CBDC comes as South Africa readies to regulate digital currencies. As reported by Bitcoin.com News, a working group known as the Intergovernmental Fintech Working Group (IFWG) recently published a position paper that recommended the regulation of crypto service providers.

Already, several South African banks are blocking clients from using buying cryptocurrencies on overseas platforms. According to reports, this action by banks is being made at the behest of regulators who want the country’s exchange control rules to be extended to include cryptocurrencies.

Meanwhile, no date has been given as to when SARB is expected to complete its study and when the central bank expects to start piloting this.

What is your view on this revelation by the SARB governor? You can tell us what you think in the comments section below.

Fed Governor Lael Brainard Can’t Imagine Future Without Digital Dollar

Fed Governor Lael Brainard Can’t Imagine Future Without Digital Dollar

Pointing to a number of reasons why a digital version of the U.S. dollar should be created, Federal Reserve Governor Lael Brainard insisted that not having one wouldn’t lead to a sustainable future. The central bank official believes a digital dollar will have both international and domestic applications.

US Fed’s Lael Brainard Can’t Wrap Head Around Not Issuing CBDC

With other nations, most notably China, moving forward with their own digital currency projects, Lael Brainard, member of the U.S. Federal Reserve Board of Governors, has highlighted the urgency around the development of a digital dollar. Speaking to the Aspen Institute Economic Strategy Group on Friday, Brainard stated:

The dollar is very dominant in international payments, and if you have the other major jurisdictions in the world with a digital currency, a CBDC offering, and the U.S. doesn’t have one, I just, I can’t wrap my head around that.

“That just doesn’t sound like a sustainable future to me,” Lael Brainard added, quoted by Reuters. Her statement comes as the Fed is gathering public feedback on the potential costs and benefits of issuing a U.S. central bank digital currency (CBDC). A discussion paper, that will also cover design aspects, is expected in early September.

Brainard went on to list various reasons why a digital dollar is needed. “One of the most compelling use cases is in the international realm, where intermediation chains are opaque and long and costly,” she said. On the domestic front, the Fed governor turned attention to the rise of cryptocurrencies backed by fiat money, but not by a government or so-called stablecoins.

Stablecoins could proliferate and fragment the payment system, Lael Brainard warned, also noting that one or two of them could achieve a certain level of dominance. The Federal Reserve representative further elaborated:

In a world of stablecoins you could imagine that households and businesses, if the migration away from currency is really very intense, they would simply lose access to a safe government backed settlement asset, which is of course what currency has always provided.

Brainard is convinced that a U.S. digital currency could be instrumental in solving other important problems as well. A digital dollar could, for example, help to overcome difficulties with government payments reaching people that don’t have bank accounts during a crisis like the Covid-19 pandemic, she suggested. The unbanked are usually those who need these payments the most, the Fed official stressed.

Do you expect the U.S. to catch up with China in the development of a central bank digital currency? Share your thoughts on the subject in the comments section below.

Bitcoin Price Regains Strength Above $41K, Crypto Market Cap Jumps 6% in 24 Hours

Bitcoin Price Regains Strength Above $41K, Crypto Market Cap Jumps 6% in 24 Hours

Crypto assets have climbed in value during the last 24 hours as the price of bitcoin tapped a high on Friday, reaching $42,411 per unit at 8:00 p.m. (EDT). The entire market capitalization of all 10,000+ crypto assets is $1.64 trillion on Saturday, up over 6% during the last day.

Bitcoin Climbs Over 20% This Week

The price of bitcoin (BTC) and a number of other digital assets have climbed higher in value during the last few days. Five days ago, a massive short squeeze propelled the price of bitcoin higher as it jumped just below the $40K handle from a low of $34,500 per unit.

Bitcoin Price Regains Strength Above $41K, Crypto Market Cap Jumps 6% in 24 Hours
Bybit.com’s Liquidation Data.

Similarly, there was also a large derivatives expiry on Friday ending the month of July and at around 8:00 p.m. (EDT) a swathe of short positions were liquidated. During the course of the last day, $284.7 million worth of positions were liquidated according to bybt.com’s Liquidation Data.

After 8:00 p.m., the price of bitcoin (BTC) quickly spiked to $42,411 per unit and has remained above the $41K handle since then. BTC is up over 7% today and over 20% during the last seven days. Out of the entire $1.64 trillion, bitcoin’s (BTC) market cap captures 47.66% of the aggregate with $781 billion.

Bitcoin Price Regains Strength Above $41K, Crypto Market Cap Jumps 6% in 24 Hours
BTC/USD chart on July 31, 2021, via Bitstamp.

BTC has around $33 billion in global trade volume on Saturday with tether (USDT) commanding 59% of all trades. This is followed by USD (12.29%), BUSD (5.85%), JPY (4.34%), and EUR (3.41%). At the time of writing, BTC is exchanging hands for $41,522 per unit.

Ethereum Spikes 12% This Week, Easyfi Jumps Over 2,800%, Tether Captures 47% of Global Trade Volume

The second-largest crypto asset, in terms of market cap, is ethereum (ETH) up over 5% during the last day. ETH has gained 12% during the last seven days and at press time ETH is swapping for $2,455 per unit.

Bitcoin Price Regains Strength Above $41K, Crypto Market Cap Jumps 6% in 24 Hours
ETH/USD chart on July 31, 2021, via Deribit.

The biggest gainers during the last seven days include the coins easyfi (EASY) up a whopping 2,854%, flexacoin (FXC) up 706%, and omix (OMX) up 500% this week. The biggest weekly losers include beetle coin (BEET) down 83%, chip (CHIP) down 54%, iov blockchain (IOV) down 51%.

The biggest 24-hour gainer among the top ten largest crypto assets, in terms of market valuation, is polkadot (DOT) which is up 12% today and 20% during the last week. Out of the $1.64 trillion worth of crypto assets, the reported trade volume on Saturday is $84 billion. Tether (USDT) reportedly commands $57 billion or 47.36% of today’s global trade volume among all the crypto assets recorded.

What do you think about the recent crypto run-up and improved prices? Let us know what you think about this subject in the comments below.

Digital Ticket Stubs: New York Knicks Launch Team’s First NFT Collection

On Tuesday, the New York Knickerbockers, in partnership with Sweet, launched the NBA team’s first-ever non-fungible token (NFT) collection. The NFTs feature limited edition digitally designed 3D game tickets made specifically for the Atlantic Division basketball team. With less than 24 hours left on the auction, the Knicks’ NFT sale has sold out a number of tickets.

3D NFT Tickets from 5 Classic New York Knicks’ Games

A number of NBA teams are getting in on blockchain technology and many American professional basketball teams have engaged in all types of crypto concepts like NFTs and partnerships aimed at elevating cryptocurrency adoption.

The NBA has its own Blockchain Advisory Committee and teams like the Portland Trail Blazers, Boston Celtics, and Cleveland Cavaliers have recently stepped into the blockchain fray. This week the New York Knicks launched its first-ever NFT collection as the professional team recently partnered with the NFT marketplace Sweet to auction the collectibles.

The Knick’s NFT collection saw five game tickets issued and so far three of the lots have sold out. Then there’s the Knick’s 2020-2021 commemorative plaque auction item. “Commemorate the Knicks’ 2020-2021 season with this one-of-a-kind 3D NFT that displays all 5 tickets,” the nyknft.com website explains. “The highest bidder receives the 1-of-1 ticket plaque and mint #1 of all 5 individual ticket NFTs delivered to a preferred wallet.”

The New York Knicks’ commemorative plaque NFT auction item.

According to the commemorative plaque auction item’s description, the five games being highlighted via digital tickets in the commemorative plaque include:

  • April 9: OT victory over the Memphis Grizzlies to tip off 9-game win streak
  • April 24: 9th victory in a row after defeating the Toronto Raptors
  • May 16: Beating the Boston Celtics to close out the regular season and clinching the #4 seed for the Eastern Conference Playoffs
  • May 23: First playoff game at MSG in 8 years & largest indoor event in NYC since March 2020
  • May 26: Knicks erased a 13-point halftime deficit to even the series at 1-1

The commemorative plaque auction ends at 12:00 p.m. (EDT) on Saturday, July 31, and the current highest bid by the Sweet marketplace user ‘Esteban M.’ stands at $5,565.55. The NFT tickets for the Knicks’ April 9 OT victory and the April 24 ninth consecutive victory are the only two single 3D game tickets that remain. The batch of New York Knicks’ NFTs are Ethereum-based ERC721 token-type collectibles, according to the auction website.

Non-fungible tokens have seen a lot of attention in recent times, and the hype has gotten so pricey that some projects are fractionalizing NFTs. The popular television stars and entrepreneurs Mila Kunis and Ashton Kutcher launched an animated series called “Stoner Cats” and only NFT holders can watch. However, as far as sports fans are concerned, a recent survey shows nearly three out of four people are “moderately skeptical” about the longevity of NFT investments.

What do you think about the New York Knicks NFTs? Let us know what you think about this subject in the comments section below.

Automated Investment Service Firm Wealthfront Adds Support for Grayscale’s BTC, ETH Trusts

Automated Investment Service Firm Wealthfront Adds Support for Grayscale's BTC, ETH Trusts

On Thursday, the Palo Alto-based automated investment service firm, Wealthfront Inc., announced that customers can now get exposure to crypto assets via the company’s platform. The firm revealed that clients can choose from two Grayscale investment trusts, as the company now offers investments in the Grayscale Ethereum Trust (ETHE) and the Grayscale Bitcoin Trust (GBTC).

Wealthfront Connects Customers to Two Grayscale Trusts

This week Wealthfront has added two Grayscale crypto trusts to the firm’s menu of investments. Wealthfront is an automated investment operation sometimes referred to as a robo-advisor that offers wealth management services. The company was co-founded in 2008 by Andy Rachleff and Dan Carroll and as of 2020, Wealthfront had $15.85 billion assets under management (AUM).

The announcement on Wednesday notes that Wealthfront customers can now gain exposure to crypto assets via the platform’s Grayscale bitcoin and ethereum trusts. The news follows the firm’s decision to add customizable Wealthfront portfolios and among the two crypto trusts, there’s hundreds of options to choose from.

“Buying cryptocurrency can feel intimidating,” the announcement states. “It takes time and effort to research all of the options, set up a wallet, and monitor an additional account. That’s why we’ve made it easy to get exposure to bitcoin and ethereum right in your Wealthfront portfolio, no wallets required. Instead of buying coins yourself, you can invest in GBTC and ETHE.”

Crypto Trusts via Wealthfront Have a 10% Allocation Limit

Wealthfront says that the GBTC and/or ETHE can be added to anyone’s portfolio by selecting a combined combination or single trust of up to 10% of the portfolio. The automated investment service firm claims the 10% limit is in the best interest of customers as far as risk is concerned. “We limit your allocation to GBTC and ETHE because, as a fiduciary, we act in your best interests at all times, and these investments can be riskier and more volatile than most ETFs,” Wealthfront’s announcement details.

The GBTC and ETHE support is not Wealthfront’s first foray into cryptocurrencies as the company added connection support to Coinbase accounts in 2018. “We make it possible for you to add information about your cryptocurrency holdings in your Coinbase account to Wealthfront to get a more holistic view of your financial picture,” the company said at the time.

“GBTC and ETHE round out our significantly expanded menu of investment options,” Wealthfront’s announcement concludes. Grayscale’s bitcoin trust currently has $25.6 billion AUM and the firm’s ethereum trust has $7.5 billion AUM.

What do you think about Wealthfront allowing customers exposure to bitcoin and ethereum investment vehicles? Let us know what you think about this subject in the comments section below.

Bank of America, Coinbase, FTX Invest in Paxos Series D Funding Round

Paxos

Paxos, a blockchain services and tokenization firm has added Coinbase Ventures, FTX, Bank of America, and Founders Fund as backers in its Series D funding round that started last April. These institutions were listed as “strategic investors,” but the amounts of their contributions were not disclosed. Paxos has now raised more than $540 million in funding.

Bank of America, FTX, and Coinbase Invest in Paxos

Two leading cryptocurrency exchanges and the second-biggest U.S. bank invested in Paxos, a New York-based blockchain infrastructure firm that focuses on offering clearing and tokenization services to other traditional firms. Bank of America, FTX, and Coinbase participated as “strategic investors” in the latest Series D funding round that the company started last April.

The interest of Bank of America in the firm is not strange. The company included the bank in its Paxos Settlement services, a blockchain platform that allows third parties to settle equity transactions. But for it to invest in Paxos means that they see a future when blockchain technology is more present and used in conjunction with traditional financial institutions. About this, Paxos CEO Charles Cascarilla stated:

Paxos uses innovative technology to build the regulated infrastructure that will facilitate an open, accessible, and digital economy. We’re defining this space and are excited to grow our enterprise solutions besides these market leaders.

This Series D funding round also featured the participation of important investments from companies like Paypal Ventures and Mithril Capital, raising more than $300 million.

Stablecoin Controversy

The firm states it has an edge over other competing firms: the advantage of being a fully regulated platform, having obtained the New York State Department of Financial Services (NYDFS) issued Bitlicense in October 2020. Some of its customers are PayPal, Bank of America, Credit Suisse, Societe Generale, and Revolut.

Paxos is also the custodian and issuer of two stablecoins in the market: Binance USD and Paxos Standard. The company revealed the assets backing its stablecoins last week and had harsh criticism for other companies that don’t back their stablecoins 100% with cash or cash equivalents. Its CCO Dan Burstein called out these organizations stating no regulator would allow these behaviors.

Paxos is also interested in linking blockchain and traditional finance markets by itself. Last year, it received a Preliminary Conditional Approval for a US Bank Charter, from the Office of the Comptroller of the Currency (OCC), for running its own banking business.

What do you think about Paxos’ latest funding round? Tell us in the comment section below.

Global Cryptocurrency Adoption Doubled Since January Reaching 221 Million Users: Report

crypto.com

A new report issued by Crypto.com, a cryptocurrency exchange and fintech services firm, discovered that the number of people using cryptocurrencies has more than doubled since January, reaching 221 million last June. The report states that the rise of the defi movement, institutions like Tesla, Visa, Mastercard, and Microstrategy adopting cryptocurrency, and El Salvador establishing bitcoin as legal tender, were important events that helped to popularize crypto even more.

Cryptocurrency Userbase Jumps to 221 Million Worldwide, According to Crypto.com Report

Crypto.com’s “Measuring Global Crypto Users” report found that the number of cryptocurrency users more than doubled during the first half of the year. Cryptocurrency adoption went from 106 million in January to 221 million in June, principally powered by the bull market that took bitcoin (BTC) to all-time highs during Q1. The report included information from the leading crypto exchanges in the market, including Binance, Bitfinex, Gemini, Huobi, Kraken, Okex, and Upbit among others.

The number of Ethereum users increased during the second quarter, as positive news and investor interest grew around the token. However, it was the meme coin boom and the altcoin push that happened during the two last months of the second quarter that catapulted adoption to new highs. Tokens like shiba inu (SHIB) and dogecoin (DOGE) were immensely popular and drove interest from users outside the market, powered by figures like Elon Musk putting them in the spotlight.

Accelerated Growth

The growth of cryptocurrency users has also been accelerating this last year, meaning that more users are learning about these alternatives to fiat money. The first cryptocurrency adoption report, which dates from May 2020, noticed it took nine months to reach 100 million from 65 million users. However, now it only took six months for the userbase to grow from 106 to 221 million.

Altcoins are a big part of this trend. These have started eating the market share of already established cryptocurrencies like bitcoin and ethereum, likely due to the entrance of new users into the market. At the start of the year, altcoins holders accounted for just 20% of the total cryptocurrency users. but at the end of the second quarter, this percentage grew to 38%.

Seeing the big picture, this has been a very good year for cryptocurrency adoption until now, as both institutions and retail holders have turned to crypto. About this, Kris Marszalek, CEO of Crypto.com, stated:

The growth we have seen in the first half of 2021 on our platform and industry-wide is very encouraging, and we will continue investing heavily as we pursue our goal of putting cryptocurrency in every wallet.

What do you think about Crypto.com’s latest cryptocurrency adoption report? Tell us in the comments section below.