August 13 – 19, 2018 | Trading Revenues, Blockchain Testing & More Crypto News

North iQ Weekly Newsletter is curated to provide insights on digital asset industry developments, market announcements, and performance analysis.

Revenue Generated From Crypto Trading May Double

August 17, 2018 – Analysts at Sanford C. Bernstein & Co. note that the revenue being generated at crypto exchanges might more than double this year, topping around $4 billion USD. In their report titled “Crypto Trading — the Next Big Thing is Here?”, the analysts have estimated that the buying and selling of cryptocurrencies such as bitcoin on the largest crypto exchanges generated around $1.8 billion USD in fees last year. The fees being generated from crypto trading are already at 8% of the revenue found on traditional market exchanges. The analysts have also found that in terms of segments, only the global cash equities market currently tops crypto trading.

Despite traditional market players taking a more cautionary approach, perhaps due to regulatory uncertainty, some top Wall Street firms such as Goldman Sachs and JPMorgan Chase & Co. have invested in crypto trading businesses. “As the [cryptoasset] class seasons and institutional demand builds, there are a plethora of opportunities for traditional firms,” said the analysts. Opportunities still lie in the custody, asset management, and market-making services of the crypto realm. Since many traditional market players are taking a more cautionary approach, the major cryptocurrency exchange and service provider Coinbase may end up having a “unassailable competitive position”. The analysts estimate that Coinbase already has about 50% of the transactional revenue pool.

Read the full article here.

BMO and the OTPP Test Debt Issuance on Blockchain

August 15, 2018 – The Bank of Montreal (BMO) and the Ontario Teachers’ Pension Plan (OTPP) have successfully tested a Canadian dollar debt deal utilizing the blockchain, furthering the notion that blockchain technology could revolutionize today’s fixed-income markets. According to BMO, they sold $250 million CAD of one-year floating rate deposit notes to the OTPP while simultaneously mirroring the transaction using blockchain technology. BMO’s capital markets division has built their own blockchain settlement system, which allows both the issuers and buyers to view the transactions through the distributed ledger system. By utilizing the blockchain, the bank will cut costs in areas such as compliance, reporting, and the clearing and settlement of cash-based transactions.

BMO is not the first bank to pilot a debt deal in North America. JPMorgan Chase & Co. and the National Bank of Canada tested a US debt deal using the blockchain back in April this year, which involved $150 million USD of one-year floating rate CODs and also mirrored the sales process using JPMorgan Chase & Co.’s blockchain application. “This is an important first step in developing a fully functional blockchain capability that we think will eventually allow primary and secondary trading of securities,” said Kelsey Gunderson, the head of global trading at BMO Capital Markets.

Read the full article here.

Coinbase Files a Direct Payment System Patent

August 17, 2018 – Major crypto exchange and service provider Coinbase has filed a patent for a new system which could allow users to make bitcoin payments more secure while online. The patent was filed on August 14, and will also allow its users to make payments online directly from their Coinbase wallet. The patent describes that “existing systems do not provide a solution for maintaining security over private keys while still allowing the users to checkout on a merchant page and making payments using their wallets.” By allowing users to pay online directly, while using “key ceremony” technology that encrypts user passphareses into a masterkey, it could greatly reduce the risk of having keys being stolen while doing online payments. The masterkey essentially encrypts the private keys and transaction signing, and upon completion, will delete the masterkey.

Perhaps more importantly, the patent also describes an API generation service for other websites and merchants. The API service can be integrated into traditional online marketplaces, allowing merchants to accept bitcoin payments while applying a two-part security service. The API service will be stored on Coinbase’s web service system while also on the host’s server, allowing for two-part security as transactions confirm. The development of this payment system could open the door to millions of online retailers to accept bitcoin as a means of payment.

Read the full article here. Releases Open Blockchain App for Invoice Tracking

August 17, 2018 – China’s largest retailer and e-commerce company,, has released an open blockchain application that allows its users to create their own blockchain solutions when conducting business online. The new blockchain application will allow its users to improve the transparency, efficiency, and security of their existing online operations without the need for their own independent blockchain. The “JD Blockchain Open Platform” will provide the ability for online retailers to build smart contracts on both their private and public enterprise cloud networks. Online retailers will be able to implement a number of features to their existing operations, such as the tracking of product movement, property assessments, digital copyrights, and authenticity certificates.

The China Pacific Insurance Company (CPIC) was announced as the first partner to use the’s open blockchain platform. By using a unique blockchain ID to each invoice document, the company can essentially streamline their existing accounting process and strengthen the governance of their electronic invoices. “We are confident its blockchain e-invoice system will create greater efficiency in our operations,” said Yanhong Pan, the vice president and chief financial officer at the CPIC.

Read the full article here.

How Does Bitcoin Correlate to Existing Financial Markets?

August 15, 2018 – While it may seem that bitcoin and other cryptocurrencies have developed stronger ties to existing financial markets, their non-correlated natures and other safe-haven aspects remain a major selling point for adding cryptocurrencies to financial portfolios. Upon testing the correlation of bitcoin against major equities, currencies, and commodity indexes, its correlation coefficient rarely rises above 0.5. At a coefficient rating of 1.0, the cryptocurrency would signal a strong positive correlation, where as -1.0 would signal a strong negative correlation. Despite bitcoin sitting somewhere above the middle, at a 0.5 correlation coefficient, it is interesting to note that in times of economic crises, such as the recent events surrounding Turkey and the devaluation of the Turkish Lira, trading volumes on Turkey’s cryptocurrencies exchanges jumped while the Lira declined. To some extent, the correlation to traditional macroeconomic activity increased; however, it wasn’t enough to boost bitcoin higher on its correlation coefficient to existing financial markets.

“Non-correlation is not the same as inverse correlation so there’s no guarantee that when the market goes down crypto will go up,” said Matt Hougan, the vice president of research and development at Bitwise Asset Management Inc. “Over the long term, we think the fundamental drivers of crypto are different from the fundamental driver of equities and other assets, and we would expect the low correlation to persist.”

Read the full article here.

3iQ Global Cryptoasset Fund: Price as at August 17, 2018

3iQ 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.

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This Weekly Cryptoasset Newsletter is for informational purposes only and does not constitute, either explicitly or implicitly, any provision of services or products by 3iQ Corp (“3iQ”). Investors should determine for themselves whether a particular service or product is suitable for their investment needs or should seek such professional advice for their particular situation.3iQ Corp. makes no representation or warranty to any investor regarding the legality of any investment, the income or tax consequences, or the suitability of an investment for such investor. All content is original and has been researched and produced by 3iQ unless otherwise stated therein. No part of the content may be reproduced in any form, or referred to in any other publication, without the express written permission of 3iQ. All statements made regarding companies, securities or other financial information contained in the content or articles relating to 3iQ are strictly beliefs and points of view held by 3iQ and are not endorsements of any company or security or recommendations to buy or sell any security. No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. By visiting and/or otherwise using the 3iQ website in any way, you indicate that you understand and accept the terms of use as set forth on the website and agree to be bound by them. If you do not agree to the terms of use of the website, please do no access the website or any pages thereof. Any descriptions of, references to, or links to other products, publications or services does not constitute an endorsement, authorization, sponsorship by or affiliation with 3iQ with respect to any linked site or its sponsor, unless expressly stated by 3iQ. Any such information, products or sites have not necessarily been reviewed by 3iQ and are provided or maintained by third parties over whom 3iQ exercises no control. 3iQ expressly disclaims any responsibility for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on these third-party sites. The information contained herein, while obtained from sources believed to be reliable, is not guaranteed as to its accuracy or completeness and confers no right on purchasers. Past performance of cryptoassets is not indicative of future performance and should not be used to forecast any return that an investor may realize.

Fred Pye

Frederick T. Pye


Frederick T. Pye is the Chairman, Chief Executive Officer and Director of 3iQ Corp. He is also the Chairman and Director of 3iQ Digital Holdings Inc. Mr. Pye is recognized for creating and promoting creative and unique investment products for the investment industry.

Mr. Pye has managed private client portfolios with Landry Investment Management and various other investment dealers. Prior to this Mr. Pye was Founder, President & Chief Executive Officer of Argentum Management and Research Corporation, a company dedicated to managing and distributing quantitative investment portfolios including the first long-short mutual fund in Canada.

He was also Senior Vice-President and National Sales Manager of Fidelity Investments Canada and an integral part of the team that saw assets rise from $80 million to over $7.5 billion in assets under management during his tenure. He also held various positions with Guardian Trust Company, which listed the first Gold, Silver and Platinum Certificates on the Montreal Exchange.

Mr. Pye obtained a Masters in Business Administration from Concordia University.