Daily Bit #138: When The Finra Approval Hits
Word On The Street
Another day, another Coinbase headliner
However, it’s not because we’re picking favorites — our hands are tied. Yesterday, a nod from the SEC allowed Coinbase to proceed with three acquisitions that will position the exchange as one of the first platforms permitted to support tokenized securities.
Presenting the inductees:
Keystone Capital Corp.: Finra-registered broker-dealer (announced early June)
- Value-add: Broker-dealer license
Venovate Marketplace Inc: NY-based broker-dealer
- Value-add: Alternative trading system license
Digital Wealth LLC: LA-based financial planning and investment management firm
- Value-add: Registered investment advisor
Overall, it’s a huge step forward
Coinbase still needs to fuse the appropriate technologies with their new subsidiaries, although completing that process will likely give the exchange a massive first-mover advantage in the form of an artificial — or digital, what have you — moat.
And circling back to yesterday… Ripple enthusiasts are thrilled. Though to be fair, there’s still no guarantee that Coinbase will ever provide support for XRP. But the token can no longer be ostracized due to a security token smackdown.
The bottom line: All signs point to there being a more supportive regulatory environment in the states. Circle, who is still waiting for Finra approval, should be in the clear. The big question is whether US regulators feel the same about a Bitcoin ETF — 24 days until Decision Day.
It’s a bird, it’s a plane it’s….
Blockchain disrupting supply chains, for the umpeenth time in a row. This time the noise comes from French aerospace firm Thales Group, who partnered with Accenture to use the technology to “track, trace and authenticate aircraft parts and materials.”
By Accenture’s mark, Thales is in good company. A recent research report from the Dublin-based consulting firm noted that 86% of companies in the aerospace and defense (A&D) industry “expect to integrate blockchain technology into their corporate systems by 2021”.
And we’d probably do the same. Accenture’s managing director of A&D John Schmidt explained that the industry has “one of the world’s most vast and complex supply chains”, giving firms all the more reason to divert tracking responsibilities to an immutable ledger.
What Else You Should Read Today
By The Numbers
- “Fake news!” shouted ICO advisory firm Satis Group, which claims that roughly 54% of all ICO fundraising to date has gone towards “Successful” ventures — a stark difference from a Boston College study which proposedthat over half of ICOs expire within four months.
- The latest industry report on blockchain in digital media, ads, and entertainment estimates that the market will reach 9 figures ($1,000.1 million) by 2023 — a Compound Annual Growth Rate of 81.1%.
- Chinese companies containing “blockchain” are up nearly sixfold in the past 7 months alone — from 555 (for all of 2017) to 3,078.
- Save The Date: American lawmakers are holding a hearing on July 18thto “examine the extent to which the United States government should consider cryptocurrencies as money and the potential domestic and global uses for cryptocurrencies.”
- When analyzing crypto projects, don’t sleep on tokenomics — Nick Evdokimov explains why a startup’s token economy is so fundamentally important.
- For Ripple’s recent recruiting roundup, we present Dan Morgan (Head of European Regulatory Relations), Kahina Van Dyke (Senior VP of Biz & Corp Development), and David Schwartz (CTO).
- STASIS, a blockchain platform tokenizing financial assets, launched the EURS stablecoin that is backed by, you guessed it — Euros.
- Robinhood is adding support for crypto’s favorite good boy, $DOGE, on the heels of news that Litecoin and Bitcoin Cash will be added to the trading platform.
- In a less than photogenic moment, Kodak licensee Spotlite revealed that the photo company’s KodakCoin mining proposal will be discarded.
- Operation Big Apple is a go for BitPay: the Atlanta-based blockchain payment provider is the eight company to receive a BitLicense.
- The Financial Stability Board developed a framework and metrics to “monitor the financial stability implications of crypto-asset markets” on the G20 members.
- Chinese officials are bullish as ever on blockchain, confirmed by one deputy director’s recent commentary on the tech’s ability to make up for deficiencies across a slew of market sectors.
Bulls and Bears
Bull: In what looks like your standard piece of M&A activity,Singapore-based CyClean.io purchased 60% of Imusic Things Limited, the holdings company of bike sharing company Ketch’Up.
Catching up on Ketch’Up
The company’s mission is carbon restriction, aiming to connect the Hong Kong community with a web of bikes, whose mileage, fees, and locations can be tracked on the Ketch’Up mobile app.
Why it’s not just another Heinz flavor: In the words of CyClean, “it is the first time an acquisition happened solely by cryptocurrencies and not cash or spot goods”. Although no price was listed in company reports, shareholder compensation was split 50/50 between CyClean and JPAY tokens.
Our take: Companies are just getting started with using crypto for M&A activity. It’s likely bottlenecked by a traditionally lengthy due diligence process and token volatility… but expect these headlines to be commonplace once security tokens hit the market.
Bear: Ethereum perma-bulls may want to consider their investment thesis after reading the latest report from Tetras Capital, a NY-based hedge fund dialed in on the blockchain industry….
… and dialed out of ETH
As noted in their blog, Tetras started shorting Ethereum in May. Their rationale in short? Ethereum is still overvalued.
A quick peek at the exterior reveals that KPIs are looking favorable:
- ~$48 billion market cap
- 30+ ERC-20 tokens valued north of $100M
- 1,500+ decentralized apps
- ~750,000 transactions per day
But under the hood, things are falling apart. Tetras argued that Ethereum’s two preliminary use cases were to serve as a platform that (1) supported dApp development, and (2) facilitated capital raising.
How ETH *could* fall short
We’re not in 2017 anymore — Ethereum is no longer the sole platform capable of raising capital for ICOs. The fact that there are now a wider variety of fundraising options available makes it hard to imagine ETH seeing renewed similar demand pressure as when Ethereum was the lone option.
Then, there are regulations. Due to the SEC’s tendency to slam improperly labeled ICO offerings into the Earth, companies that *should* be classified as security tokens are less willing to deny the fact to avoid regulations during their fundraising rounds. That would expectedly decrease demand further.
On a related note: If this plays out, would it not constitute a radical shift in crypto market behavior? Dethroning the idea that all markets are heavily influenced by Bitcoin could make crypto even more perilous for retail investors lacking an institutional-grade toolbelt.
If crypto is the Wild West, consider the CFA Exam the Final Frontier. Passing all 3 levels of the exam bestows victors with the title of Chartered Financial Analyst, which can open the door to attractive career opportunities.
And when complete, no waters are left uncharted. An estimated 307 hoursare spent preparing for each of the exams, rounding out to just shy of 40 full days of stats, graphics, and policies.
More fun facts:
- The CFA Institute launched in 1947
- ~115,000 CFA Chartholders worldwide
- June 2018 pass rates by Level (1–3) were 43%, 46%, and 54%
But most importantly, cryptocurrencies and blockchain are being added to the curriculums of Levels I and II examinations. Given Wall Street’s growing interest in digital assets, the announcement is understandable — employees need to learn the ropes.
CFA hopefuls will get their first crack at the material for 2019 exams in August.
That’s all for today!
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