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Bitwise Asset Management Report to SEC Brings Clarity to Spot Bitcoin VolumesMarch 20 – Bitwise Asset Management submitted a comprehensive research report to the U.S. Securities and Exchange Commission (SEC) on the bitcoin market and the cryptoasset’s potential to support an exchange traded fund. The report was submitted in conjunction with Bitwise Asset Management’s proposal to the SEC to list shares of the Bitwise Bitcoin ETF Trust on the NYSE Archipelago Exchange. The report provides critical data relating to bitcoin as an investable asset class, delving into topics such as market size, potential for manipulation, custody, valuation, liquidity, and arbitrage. Several media outlets have expressed some of the more sensational findings in the report, such as “more than 95% of volume” as being “faked” in the bitcoin spot market. According to CoinMarketCap.com, bitcoin spot market daily trading volumes were around $6 billion USD, while the report suggests that actual spot market volumes are around $270 million USD. The estimated volume amount did not take into account futures trading volumes nor OTC trading volumes and was very narrowly derived from selecting exchanges that Bitwise deemed reliable over a narrow window of time. Media outcries surrounding the overstatement of daily trading volume are grabbing more attention than some other key findings in the report. It is important to note that many of the 81 exchanges analyzed in the report operate in overseas jurisdictions that are subject to little or no regulation, and therefore operate without repercussions of faking trading volumes. The report highlights that regulated exchanges, like those regulated by the New York Department of Financial Services (NYDFS) such as Gemini and Coinbase Pro, do not overstate their trading volumes, and may have sufficient liquidity and KYC/AML procedures in place to provide sufficient custody and price discovery for financial products based on bitcoin. The report notably contrasts regulated exchanges to those that are not subject to regulation and which in some cases are characterized by market manipulation. The analysis focused on tick data, market depth, and several other metrics. Data from Coinbase Pro on December 12, 2018 notes that bitcoin was trading at $3,419 USD, and trading at a 0.0003% spread, “making it amongst the tightest quoted spread of any financial instrument in the world”. Other research in the report notes that bitcoin is indeed ready for an exchange-traded product. Spot trading volume for Gold is around 0.55% of its total market capitalization, while data shows that estimated spot trading on bitcoin from regulated and non-overstated exchanges is 0.39%. When taking into account CME futures volumes and OTC trading volumes, the percentage increases to 0.51%, putting it in-line with its closest relatable exchange-traded asset class, which is Gold. Read the full article here. |
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OSC Hearing Process on 3iQ’s “The Bitcoin Fund” set to Begin April 3, 2019March 21 – The first attendance on the hearing for 3iQ’s “The Bitcoin Fund” has been set for April 3rd, 2019. The meeting will be to discuss procedures and scheduling for the public hearing. The actual hearing will be crucial for the development of regulated cryptocurrency investment products in Canada, as it could be the first regulated exchange-traded cryptocurrency fund product on the Toronto Stock Exchange (TSX). 3iQ is seeking to overturn the decision made by the OSC to refuse to issue a receipt for the prospectus of “The Bitcoin Fund”. The OSC decision to refuse to issue a receipt for the prospectus of 3iQ’s The Bitcoin Fund was published on February 15, 2019. Read the full article here. |
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Bakkt Raises its Series A at a 700 Million USD ValuationMarch 21 – Bakkt, the crypto trading platform backed by the Intercontinental Exchange (ICE), has an estimated post-money valuation of $740 million USD after raising over $180 million USD in funding last year from several high-profile investors. The trading platform has been long awaited by the crypto community as the project could bring in more buying demand for cryptocurrencies such as bitcoin. The ICE may have sold upwards of 25% of its shares to other notable investors such as Galaxy Digital, Pantera Capital, Microsoft, and Starbucks. Sources familiar with the transaction have noted that the recent capital raise brought investor questions relating to the risk-return ratio of the project. The project was originally supposed to be released sometime in the first half of 2019, but Bakkt has yet to launch the official version of the platform. “From a cash-flow perspective, Bakkt will not be earning much based on their proposed contract fees, so they really need a lot of volume,” said one of the sources. “A lot of things will need to line up for investors to receive returns that they would typically expect for a Series A.” Read the full article here. |
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Jack Dorsey Unveils Square Crypto, Looks to Hire Industry ProfessionalsMarch 21 – Jack Dorsey has unveiled a new line of business for his leading fintech company, Square. In a Tweet on March 20, Dorsey announced “Square Crypto”, which is expected to operate as a branch of Square by providing growth to decentralized networks and cryptocurrencies through development, design, and marketing services. In the Tweet, Dorsey said that he would hire 3 to 4 blockchain engineers and one designer to work on the project. Dorsey notes that blockchain and cryptocurrencies are a good way to bolster “individual economic empowerment,” and help achieve a “more accessible global financial system.” Jack Dorsey has long been an advocate for cryptocurrencies and the blockchain. Last year, he announced that “Square Cash” would allow the buying and selling of bitcoin among several other leading cryptocurrencies. Just several weeks ago, he disclosed in a podcast with Joe Rogan that he personally had bought the equivalent of $10,000 USD worth of bitcoin. “The internet has always wanted its own currency, but it hasn’t had the technology (right principles, uniform, passionate early adopters) until 10 years ago… I think it will be [Bitcoin] given all the tests it has been through and the principles behind it, how it was created. It was something that was born on the Internet, was developed on the Internet, was tested on the Internet, [and] it is of the Internet,” said Dorsey in the podcast. Read the full article here. |
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Silvergate Bank Adds 59 New Crypto ClientsMarch 19 – Silvergate Bank, a state chartered bank which is known for being one of the only banks to offer banking services to crypto companies, has announced that has recently added 59 new crypto-related clients. According to an updated IPO prospectus filed with the U.S. Securities and Exchange Commission (SEC), the bank had 542 crypto-related clients as of December 31, 2018. The number would include cryptoasset exchanges, institutional investors with exposure to digital assets, and other crypto projects and startups. On September 30, 2018 the bank had 483 crypto-related clients that it reported when it filed to go public in 2018. In a recent SEC filing, Silvergate Bank identified several of its clients which were previously unknown. Notably, the major cryptocurrency market maker Genesis Trading were clients of the firm, as well as other investment fund managers Kenetic and Polychain capital. Earlier reports indicated that the bank has also worked with other New York Department of Financial Services (NYDFS) regulated industry heavyweights such as Gemini, Coinbase, and bitFlyer. However, despite new clients coming on board, total US dollar deposits did decline for the bank in its fourth quarter. The decline in deposits was from $1.59 billion USD on Sept. 30, 2018 to $1.47 billion USD on Dec. 30, 2018. Read the full article here. |
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3iQ Global Cryptoasset Fund: Price as at March 22, 20193iQ is the first regulator approved multi-cryptoasset portfolio manager in Canada, providing accredited investors with exposure to bitcoin, ether, and litecoin through its 3iQ Global Cryptoasset Fund. |
