Category Archives: Fidelity

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Fidelity Creates ERC-1404 Crypto for Employee Rewards

Fidelity Investments, a financial giant with nearly USD 2.5 trillion of assets under management, has been experimenting with an internal cryptocurrency for employee rewards. Specifically, Fidelity’s Center for Applied Technology (FCAT) Bits and Blocks Club partnered with Tokensoft to launch an ERC-1404 token.

ERC-1404 is a protocol for creating tokens on the Ethereum blockchain. ERC-1404 allows token operators to whitelist and blacklist users, as well as restrict transfers between certain addresses, cap the number of tokens that can be received by any given address, and to put limits on the number of tokens that can be exchanged for goods at the employee rewards store.

Essentially, ERC-1404 allows Fidelity to be in complete control of their token. Simultaneously, the token runs on the well-known and highly-secured Ethereum blockchain. It is clear that ERC-1404 can be used by corporations to combine the best aspects of decentralization, such as immutability and security, with centralized aspects to ensure that the rewards system does not get out of control.

Ultimately, this internal Fidelity token was used to incentivize employees to attend meetings and other activities, and simultaneously gave employees hands-on experience with cryptocurrency. Juri Bulovic from Blockchain Project Management at FCAT says “For employees, it’s a real use case for restricted tokens and gives them an opportunity to get hands-on experience with tokens, wallets, and other blockchain technology to understand how it works and how we might apply this in other areas”.

Thus, this experiment with an employee rewards token may eventually lead Fidelity even deeper into the blockchain and crypto world.

 

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CBOE Futures Closure Unlikely to Impact Bitcoin

bitcoin, CBOE, futures

In about a week’s time, Bitcoin futures at CBOE will cease operations after almost a year and a half. After its last futures contract expires on 16 June 2019, it will close indefinitely.

CBOE spokeswoman Suzanne Cosgrove explained to Bloomberg that there were no plans at all by the company to introduce any new crypto trading products, after confirming its decision to close, announced earlier in March. She said:

“[CBOE] is assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading, but we have nothing new to announce at this time.”

Although Bitcoin futures markets have had some sway over the price of Bitcoin ever since their introduction —  it is sometimes credited for helping bring on the bull market in 2017 — analysts do not believe that this closure will have any impact on the price movements this time around. This will all be thanks to the success of CBOE’s rival in Bitcoin futures, CME Group.

Just last month, CME Group recorded its highest ever volume for Bitcoin contracts: 33,700 individual contracts worth over USD 1 billion on a single day on 13 May 2019.

Markets analyst Alex Krüger also said that Bitcoin was CME’s second highest traded asset in May and that demand was not diminishing from institutions and accredited investors:

“Bitcoin is the second most heavily traded asset at the CME when measured by the volume / open interest ratio. In other words, bitcoin is an asset very actively traded throughout the day… Volume is the number of contracts traded in a day, while open interest is the number of outstanding contracts held (unsettled) at the end of the day. A high ratio points towards market participants actively trading intraday for whatever reason (hft, arbitrage, etc).”

And with Fidelity and Bakkt also scheduled to come later this year, it doesn’t seem like the bulls will stop their pace.

 

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Grayscale CEO: Bitcoin’s Price Uptrend Likely Due to US-China Trade War

Grayscale CEO_ Bitcoin’s Price Uptrend Likely Due to US-China Trade War

In the past few months – for the most part of 2019, Bitcoin has been bucking the trend, attracting onlookers from the traditional investment circles, and while the reason behind the sudden increase in Bitcoin’s price may have been unclear, critics have engaged numerous sound reasoning wavering from strong fundamentals to typical bullish technical trends sponsored by whales.

In an interview with Forbes, owner of Digital Currency Group Barry Silbert noted how Bitcoin’s sudden uptrend began just as the trade discussions between the US and China broke down:

“It’s certainly interesting that the [Bitcoin] price started its acceleration, moving up and to the right, when the trade discussions broke down.”

He explained Bitcoin as a non-correlated asset and which has performed better than historical stores of value investments like gold, citing other events such as Brexit and Grexit and how Bitcoin price was up at both instances.

According to the Bitcoin bull, whose investment firm has a share in over 145 crypto-related ventures, and has its Grayscale Investments arm holding over USD 2 billion AUM, its 2019 Q1 reports suggested a heavy influx of institutional investors into the Bitcoin portfolio and significant interest from hedge funds.

Silbert has always been strongly opinionated about Bitcoin investments as against traditional investment hedge such as gold, and recently started a #DropGold campaign – as a zero-sum game – to intentionally place Bitcoin on the path of investors of all types – specifically targeting older generations. His reasoning is that as Bitcoin becomes more mature and becomes more resilient, there’s a possibility gold is not going to play the role it did for the older generation of investors, and perhaps Bitcoin may play that role at least for the younger generation. He said:

“Bitcoin has real utility. [It’s] creating a new financial system, eliminating middlemen, friction, cost, removing barriers. And if you think about the value it can bring from the remittance perspective –banking the underbanked and unbanked, that is [the] real true utility. Bitcoin has the potential to create real economic opportunity around the world. [Whereas], gold, the more expensive it gets, the less useful it becomes.”

It appears over the years, Bitcoin has been maturing to become the digital gold of an emerging economy. Silbert explained the trend in Bitcoin’s price history suggesting that its pattern of ups and downs over the past 5, 6, or 7 years with significant drops in the price of up to 60, 70, or 80% while testing new highs – up to 4 record highs – so far, were maturity indicators.

A major indicator is the infrastructural growth of the Bitcoin ecosystem since the last bubble in 2017 and to Silbert it is as clear as night and day. These growths are explained as the on-ramps of institutional grade bitcoin-related services as well as custody providers such as Fidelity and Bakkt, revamps of trading infrastructures, compliance structures, and increased awareness.

According to data from CoinMarketCap, Bitcoin is currently trading at about USD 7,938.01 after recently hitting its year-to-date high of USD 8,320.82 – a figure trending close to its 12-months-high of USD 8,424.27 in July 2018.

 

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Coinbase, Fidelity in 2-Horse Race to Acquire Xapo

Coinbase, Fidelity in 2-Horse Race to Acquire Xapo

Cryptocurrency corporate giants Coinbase and Fidelity are reportedly neck to neck in a bid to buy out crypto wallet provider Xapo, according to blockchain media outlet The Block.

Coinbase, a major crypto exchange based in the USA and recently expanded to the UK, is said to be in the lead after two weeks of intense negotiations, but digital assets fund manager Fidelity is not backing out at this stage.

Sources have told The Block that the Coinbase offer on the table now is for a USD 50 million buyout plus an earn-out to enhance its custody business, one of the services thought to appear attractive to retail and institutional digital asset owners.

Xapo’s CEO Wences Cesares was an early Bitcoin adopter and has built the company on custodial services, claiming almost 700,000 Bitcoin under custody, worth today over USD 5 billion, including some 226,000 Bitcoin belonging to Grayscale Investment. Xapo’s core product is cold storage vault custody of Bitcoin. Since launching in 2012, Xapo has managed to raise some USD 40 million in funding.

The aggressive move from Coinbase to edge out Fidelity will mean little to the average crypto investor, but in terms of industry proponents, this attempt at diversification of revenue and acquisition of another old hand in the nascent industry speaks volumes about the outlook for the blockchain and crypto sector in 2019 and beyond.

Crypto custodial services have been of increasing interest to corporate business, with even Goldman Sachs rumored to be considering inroads into the sector.

 

 

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Bitcoin Miners Insist Mining Uses Clean Energy Not ‘Dirty Chinese Coal’

Bitcoin Miners Insist Mining Uses Clean Energy Not 'Dirty Chinese Coal'

Bitcoin miners took the opportunity to defend themselves on Friday when they justified their case for their industry saying they fuel clean energy adoption at Fidelity’s mining summit.

Fidelity has been keenly involved in the Bitcoin industry. It recently launched its Bitcoin Digital Assets Services which handle the digital currencies for institutional clients.

However, instead of talking about the brief history and overview of Bitcoin mining, Fidelity invited guest speakers who defended their cause of Bitcoin mining. These speakers tried to negate the prevalent perception that Bitcoin mining consumes a copious amount of electricity (approximately 0.26% of total world consumption) according to Diginocomist. This has led many to come of the view that Bitcoin mining is environmentally hazardous and a threat.

John Belizaire, CEO of Soluna said that,

“Miners are constantly searching for cheaper energy, and this is why they will be a catalyst for renewable power development in the near future.”

Soluna is building a wind power generating farm which will not only supply power to Soluna’s Bitcoin miners but also to the country’s electricity grid.

He further stated, “Bitcoin is at the center of the next great infrastructure that we’ve never seen before. We’re going to go to places that have incredible renewable energy sites,” foreseeing a future wherein the common perception towards the industry will change for good.

Nuclear energy produced from nuclear reactors can possibly be used to power Bitcoin mining in the future. In addition, it is claimed that mining will perhaps provide and facilitate the building of more renewable power sites.

According to research conducted by Chris Bendiksen, the head of CoinShares research department, almost all the regions where mining is done, renewable power and energy is prevalent. “The widespread notion that bitcoin is mainly mined with dirty Chinese coal is not true,” he said.

 

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Bitcoin Smashes $6,000 to Hit 6-Month High

Bitcoin Smashes ,000 to Hit 6-Month High

After threatening for a week to overcome technical and psychological resistance at USD 6,000, Bitcoin has finally breached the mark just hours ago, to bravely hold the fort right now at time of writing at USD 6,060 5:50 UTC.

Last week, Bitcoin had recorded yet another high for 2019 for the second consecutive month, after enjoying a strong month in April during which Bitcoin appreciated stronger than oil, which has been seeing a renaissance in 2019.

It had just fallen short of USD 6,000, however, but after shrugging off talks about China trade tariffs from American president Donald Trump and a USD 40 million Bitcoin theft from the hack of Binance in the same week, Bitcoin has shown remarkable resilience to reach a price not seen since November 2018.

Then, Bitcoin had been level at above USD 6,000 for about six weeks, the longest period of relative stability in years. Most speculators had expected this to be a consolidation period, but Bitcoin then slid quickly, almost touching USD 3,000 floors.

As with the price movements since February, it is difficult to explain this latest rally, especially when the biggest news hasn’t been favorable for the industry in this period. On the other hand, institutional investment is looming, with the likes of Fidelity weeks away from launching a Bitcoin trading desk.

 

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Financial Giants Race to Launch Bitcoin Trading, Eyeing Institutional Money

Fidelity Weeks from Launching Bitcoin Trading Desk

Bloomberg has revealed that US financial services giant Fidelity Investments may only be weeks away from offering Bitcoin trading options for institutional clients. It will also launch a crypto custodial service.

Meanwhile, other reports have also surfaced of other financial firms such as Ameritrade and E-Trade, who are quietly testing Bitcoin trading on their respective platforms. Among all three companies, there are now about USD 4 trillion in asset under management. All of them have expressed interest in going into the Bitcoin trading business, although Fidelity will only focus on institutional clients, while E-Trade will also open doors to retail clients.

The race to open Bitcoin and other crypto trading to institutional investments is well and truly on, and many analysts believe that this will be the catalyst for a lasting momentum and rally to awaken Bitcoin from its current slumber, pushing it on its way to new heights.

Fidelity currently boasts an assets under management above USD 2.4 trillion so this news could signal the start of a huge rally for Bitcoin, particularly as the firm also has more than 27 million customers. Early this year, it said that its Fidelity Digital Assets crypto custodial platform would be available in March, although it seems the postponement has been because of the Bitcoin trading desk.

All this new developments have come on the back of consecutive weeks of growth enjoyed by Bitcoin, which is right now pushing at its resistance level of USD 6,000, while the rest of the crypto market is witnessing strong gains.

 

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Coinbase UK Launches Own Visa Card

Coinbase UK Launches Own Visa Card

Mega Exchange has launched a Coinbase Visa card enabling British users to pay for goods with cryptocurrency.

At present, the card, linked with the Coinbase Card app for iOS and Android, is only available to UK account holders, although there are plans to add support for other European countries in the future. The card will allow worldwide purchases where crypto payments are available online or in store.

The firm has clearly gone to great lengths to satisfy its UK user base. Last year, Coinbase listened to its UK users and made changes to its platform making it easier for UK users to deposit and withdraw British pounds. Prior to that, users were required to transfer their cryptocurrency into sterling, then pay into a euro account on the Coinbase platform and only then transfer the funds in euros to a UK account, incurring SEPA transfer fees and losing money on the exchange as the euros then got changed back into pounds sterling.

The Coinbase card is another mover designed to keep its UK based clients happy in a growing competitive market where major exchanges are pushing for new clientele. The card is authorized by Paysafe Financial Services Limited and by powered by customers’ Coinbase account crypto balances.

Self-proclaimed market analyst Alex Krüger recently attracted the attention of the crypto community after making a comparison between cryptocurrency exchanges and traditional stock markets when he pointed out that “Trading on Coinbase is 48x more expensive, while trading on Bitmex is 6x more expensive”.

He argued that brokers like Fidelity charge a flat rate of USD 4.95 flat per trade, putting the sum maker and taker fee at 0.02% for a USD 50,000 trade, and at 0.33% for a USD 2,900 trade, which can further be reduced should a trader consider brokers who charge per share rather than per trade.

 

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Coinbase 48x More Expensive to Use Than Stock Exchange

Coinbase 48x More Expensive to Trade than Traditional Stock Exchange

Self-proclaimed market analyst Alex Krüger has drawn the attention of the crypto community to a rather bizarre comparison between cryptocurrency exchanges and traditional stock markets, claiming “maker fee + taker fee” for crypto exchanges could be far more expensive at higher volume tier trading.

1/ Are crypto exchanges overcharging customers?

The average “Maker Fee + Taker Fee” in crypto SPOT exchanges (excluding Gemini) for the lowest volume tier (where most users fall into) stands at 0.33%. pic.twitter.com/tZOmGSsAzO

— Alex Krüger (@krugermacro) March 28, 2019

Krüger queried the fees levied on crypto traders as he explains in a series of Tweets how legacy financial institutions often have a flat rate cut per trade, while a typical fee cut by cryptocurrency exchanges only remains fair for lowest volume tier, and according to him, this is where most users fall into. He illustrated how brokers like Fidelity charge a flat rate of USD 4.95 flat per trade, putting the sum maker and taker fee at 0.02% for a USD 50,000 trade, and at 0.33% for a USD 2,900 trade, which can further be reduced should a trader consider brokers who charge per share rather than per trade.

According to the data he shared, Gemini exchange stands out with a sum maker and taker fee set at an exorbitant 2.00%, followed by Bittrex and Bitstamp with 0.5%, whereas Bitmex being a derivative market only charges 0.05%. Meanwhile, major US cryptocurrency exchange Coinbase Pro takes 0.40%.

In a comparison with foreign exchange markets, Krüger further cited how “an FX trader at Oanda would pay 0.008% for a round trip (in and out of a position)”, concluding that:

“Trading on Coinbase is 48x more expensive, while trading on Bitmex is 6x more expensive.”

Moreover, Krüger opined: “A cross-asset trading costs analysis should also account for spreads and relative volatility,” which invariably should impact fees levied, however, “crypto fees are generally high even after adjusting by relative volatility”.

In recent times, institutional investors have been targeted with offshoot market solutions to further attract this class of investors to the burgeoning digital asset industry. However, considering Krüger’s analyses, crypto exchanges second to huge volatility index of cryptocurrency markets may indeed be a huge deterrent for currency traders from the traditional market.

In February, Marketing consultancy Edelman published a report noting an unwavering millennials’ support for cryptocurrency exchanges, further corroborating eToro’s findings of a generational shift in trust suggesting a concrete trust in cryptocurrency market exchanges as well as a fading faith in the traditional stock market exchanges. However, while cryptocurrency trading appears to be more rewarding due to high volatility, the practical aspects of trading come with hidden fees that make it a trying first-experience for newcomers into the industry.

Blockchain technology may appear to solve certain constraints in legacy financial institutions and reduce the cost of transactions between clients, however, cryptocurrency exchanges may end up constituting a clog to the furtherance of the decentralized ecosystem as it reinvents the centralized systems obtainable in the traditional markets.

 

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Survey: Millennials Don’t Mind Retirement Plans Facilitated with Crypto

Survey: Millennials Don’t Mind Retirement Plans Facilitated with Crypto

Marketing consultancy Edelman has published a new report that reveals millennials have sizeable investments in the cryptocurrency industry. The report also noted that 74% of millennials into crypto say tech innovations like blockchain make the global financial system more secure.

This has been corroborated by a recent study carried out by eToro revealing that almost half of the millennial generation trust in the cryptocurrency market exchanges more than the traditional stock market exchanges, and US respondents would also consider a 401k retirement plan in crypto.

eToro’s study sampled 1,000 online traders and reportedly found 43% of the millennial respondents losing trust in the traditional capital market. Meanwhile, 77% of the older generation sampled are dogged customers of the established capital market.

Accordingly, Managing Director of eToro Guy Hirsch commented on a “generational shift in trust”, which is what blockchain stands for ideally. He went on to suggest that the shift may have been due to the economic crisis and the resulting financial impediments meanwhile the institutions which were supposed to provide confidence were blossoming at the peril of the customers.

Forward-thinking generation

Sometime last year, Swiss Fintech company Creologix concluded that most millennials were not saving for retirement but were, however, stocking up on cryptocurrencies in an attempt to leverage the financial security these new asset classes may provide. eToro’s report also indicated half of the respondents from the survey showed interest in a 401k plan facilitated by crypto.

In the United States, perhaps one of the reasons driving these millennials more into crypto is because of the insurmountable pressure of college debts as well as the quest for financial stability, especially with the speculation of another global economic crisis on the horizon.

Compared to other traditional investment vehicles, cryptocurrencies also have been reported to have more appeal to millennials whereby a survey had inferred that: “For Millennials the soaring performance of Bitcoin – followed by an almost equally profound correction – holds more intrigue than the prospect of steady growth in house prices.”

Paradigm blend

The cryptocurrency industry has taken up a likeness to the traditional capital market as it mimics mechanisms such as the traditional funding in the form of initial public offerings and translating it to initial coin offerings, which in its own way has contributed to mass adoption of blockchain and its underlying asset classes.

In order to remain consistent with the technological shifts, as seen with social network evolution, user experience-centered markets tailored by millennials, most legacy institutions are now in conformity with trends in the blockchain industry. And as the report further stated:

“Despite millennials trust in crypto over traditional stock, they are still enthusiastic about the prospect of traditional financial institutions offering crypto assets.”

More so, most of the millennials acknowledge interest in crypto-related products if offered by TD Ameritrade, Fidelity, or Charles Schwab.

Moreover, the crypto industry continues to prove itself as the revolutionary financial technology innovation it’s touted to be, as it attracts institutional investors to the emerging crypto derivative classes; security tokens as well are finding their way into the industry.

 

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