TREASURY TROUBLES
The Reserve 17.08
As markets have fallen, there has been an increasing sell-off of ETH by projects — some who raised ETH at the top are now selling at an 80% loss, thereby crystallising the destruction in their war chests and their chances of hitting project milestones.
This sale-en-masse has caused huge amounts of ETH to enter the market, with, for example, what some claim was the ETH Genesis Address transfering 93,750 of ETH reserves to Bitfinex. Once other projects got wind of this, they too acted in a way to preserve the value of their treasuries, also converting their ETH into fiat.
The question we should be asking is why did projects have so much exposure to the market?
The truth is, half of the ICO-ing companies are entirely ill-equipped with the necessary business acumen to run what is essentially — (deny it all you want) — a public company, with a potentially significant treasury function due to the — (probably inappropriate for the stage) — quantum of funds raised.
Since our very first client, The Reserve has contractually mandated a liquidity and on-going treasury plan for all funds raised in an issuance. 75% of funds must be held outside of crypto. It has always been clear to us that you don’t raise capital to achieve specific goals, and then gamble that capital every day on red or black.
Much like the dot-com bubble — as everyone begins to question the value of what they are actually holding, the entire empire begins to crumble. Token projects and VCs all piled in betting on the Fat Protocol Thesis in some beautiful unquestioned group think, and now, everyone is clutching at straws trying to understand what actually brings value in the space (hint: token rights (to profit) and rules (to govern) that make tokens securities).
And so we find ourselves having to ask: are the crypto markets no different from Wall Street? The crypto communities have decried the workings of Wall Street from the outset, and yet ironically have fallen into the same vicious cycle that the tech markets did in 2000 (except maybe with a touch more naivety).
We are in a situation similar to when the tech companies gambled on their own stock options during the 2000 tech bubble. We never learn.
// MUST READS
- BCG suggests a “reality check” for blockchain in commodity trading.
- Mckinsey evaluates strategic importance of blockchain.
- Slides from the European Commission one day policy workshop on DLT
// DISASTER OF THE WEEK
Unikrn, a Seattle-based e-sport betting startup that conducted an ICO last year, is now facing a class action suit accusing it of violating securities law in the US.
// TRACTION
- Bank of Montreal and Ontario Teachers’ Pension Plan tested a CAD debt deal over blockchain.
- ICOs market sentiment is getting more bearish by day.
- Facebook Inc. executive David Marcus resigned from Coinbase Inc.’s board, a sign the social network operator is pushing ahead with its own blockchain work.
- The Bank of China has recently unveiled bank’s blockchain efforts.
- Blockchain technology could impact stock trading as much, if not more than, it has already affected currencies.
// ROAD TO REGULATION
- The Ukrainian government is planning on introducing its own crypto specific regulations. The regulations propose to treat cryptocurrencies as financial instruments such as shares or bonds rather than as means of payment such as currencies.
- The managing director of the Australian Securities Exchange has said that it could save as much as $23 billion by replacing its settlement system with a distributed ledger.
- We all know that there is a lot of fraud in this market so while hearing about it sometimes is disheartening, knowing that a lot of it is being caught out and prosecuted is positive for the future of the space: A federal judge has ruled against a blockchain startup after finding that several victims were defrauded out of potentially more than $1 million in cryptocurrencies.
- Bitmain, the world’s biggest producer of cryptocurrency mining operations, is rumoured to be planning an initial public offering in Hong Kong to raise as much as $3billion. An important player like this being subject to increased disclosure requirements would be another great step forward for the space in general.
// PROJECTS
- Crown League a project working on building a fantasy football league using cryptocurrency wants to raise $100 million. The platform aims to form a professional fantasy football platform which will allow fans to own the platform through the platform tokens.
- SFOX an institutional cryptocurrency dealer has closed $22.7 million in it’s series A funding round lead by Tribe Capital and Social Capital. The platform helps institutional investors complete large cryptocurrency transactions while minimising the impact on the cryptocurrency market. The round featured a number of high profile investors including Airbnb co-founder Nathan Blecharczyk, Y Combinator, Digital Currency Group and Danhua Venture Capital.
// EVENTS
BlockchainHub LATOKEN Forum — Ho Chi Min, Vietnam — Sep 23–25
PayThink — Austin, TX, USA — September 24–26, 2018
Finovate Fall 2018 — New York, NY, USA — Sep 24–27, 2018
TEAMZ Blockchain Summit — Tokyo, Japan. — Sep 28–29, 2018
GDIS 2018 — Santa Clara, CA, USA — Oct 1, 2018
The London Family Office & High Net Worth Blockchain Conference — London, UK — Oct 4, 2018
5th Annual Blockchain Crypto World SEC & Tokenomics Conference — Washington DC, USA — Oct 4–5, 2018
SF Blockchain Week — San Francisco, CA, USA — Oct 5–12, 2018
Blockchain East Summit & Trade Show — New York, USA — Oct 8–10, 2018
Blockchain Nation Conference Las Vegas — Las Vegas, NV, USA — Oct 9–10, 2018
PayExpo Europe 2018 — London, UK — Oct 9–10, 2018
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