May 23, 2018

Weekly Brief

After $500MM hack, Coincheck sets new target: America

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Summary

As the dust settles from NYC Blockchain Week, new announcements have been made by top financial institutions including international investment bank Nomura, British FX pioneer LMAX, and America's Coinbase.After incurring a $500MM hack in January, Japanese exchange Coincheck is back in action, announcing its planned push into the US market and terminating its support for privacy coins. Comments by the exchange's CEO suggest that the move is driven by growing concerns about the reach of Japan's Financial Services Agency (FSA). 

Regulatory dialogue in the U.S. followed a more light-hearted note this week after the SEC launched its own scam ICO site, dubbed "Howey Coin." The site's launch comes alongside a probe into more than 70 coin offerings by the North American Securities Administrators Association (NASAA).

Articles From the week

Nomura, Ledger and Global Advisors Partner to Explore Building aSecure Digital Asset Custody Solution

Nomura has teamed up with cryptoasset custody group, Ledger, and Coinshares parent company, Global Advisers, in creating a shared cryptoasset custody solution coined "Komainu." Custody has remained a challenge for the flocks of institutions looking to interact with crypto in the recent months. As interest from top banks like Nomura continues to increase, it's likely that we'll see more partnerships between traditional asset custodians and crypto technology companies approaching the issue in coming months.

Coinbase Goes After Wall Street With New Tools For Investors

Alongside efforts by Nomura, Coinbase continued its endeavor to remain a dominant industry player by introducing its own custody solution for financial institutions: Coinbase Prime. According to its website, Prime is a new suite of products for institutional clients which will include a custody solution and margin trading capabilities. The announcement is a hallmark step for Coinbase, which scaled largely through B2C growth and now aims to assemble a more sustainable, institutional client base.

A UK Trading Platform Is Launching a Crypto Exchange Pitched at Banks and Hedge Funds

Following the likes of Nomura and Coinbase, London-based foreign exchange pillar, LMAX, has announced the planned launch of its own cryptocurrency exchange, "LMAX Digital", geared towards institutional investors. CEO, David Mercer, commented on the project last week, noting the LMAX was "furthering the legitimization of the cryptocurrency market by offering institutions a platform on which to acquire, trade, and hold cryptocurrencies securely with high quality, deep liquidity."

Crypto's Biggest Hacking Victim Plots a U.S. Comeback

After being swept of nearly $500MM in a January hack, Japanese exchange Coincheck has risen from its recent fire sale to international broker Monex - now targeting the US market. The announcement comes alongside a notice that the exchange will halt trading of privacy coins, including Zcash and Monero, which allow users to obfuscate their identities in transactions.The exchange's expansion into the US market is largely driven by regulatory uncertainty currently faced by crypto firms domiciled in Japan, as revealed by CEO Oki Matsumoto in comments last week: "Japan may seem like it’s one step ahead in crypto, but in terms of deciding what’s a security or a token and attracting institutional investors, the U.S. and Europe are moving ahead."

Coincheck will likely face harsh competition from US incumbents, but the move is a strong portrayal of the US market's attractiveness to foreign technology. 

Bitmain Leads Circle’s $110 Million Round; Teams Up to Create Stable Coin

Cryptocurrency mining kingpin, Bitmain, has led Boston-based Circle Financial's $110MM Series-E round, as revealed last week. While it's uncertain how the latest round will contribute to Circle's increasingly tight grip on the OTC market, the firm's recent acquisition of Poloniex and the growing M&A appetite from competitors like Coinbase indicate that more strategic investments could be in store. The announcement also includes speculation around the creation of the company's own "stablecoin" which tracks the US Dollar, though few details have yet been disclosed.

The SEC Has an Opportunity You Won’t Want to Miss

The U.S. Securities and Exchange Commission has stepped aside from recently heightened regulatory tension by launching its own scam ICO site last week. HoweyCoins.com shows a bogus coin offering and a number of enticing "Buy Coins Now" buttons, each leading back to the SEC's site. According to Chairman Jay Clayton, "[The SEC] embraces new technologies, but... also wants investors to see what fraud looks like."No updates have been made since CFTC Commissioner Brian Quintenz commented on the differing views between the SEC and CFTC at Consensus last week.

What we've been listening to

Unconfirmed Podcast: Mike Novogratz

Mike Novogratz, the founder and CEO of Galaxy Digital Capital Management, discusses the biggest obstacles to institutional money entering the space, how their entry will affect trading opportunities, and which types of stablecoins he believes are most promising.

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