5 Months Ago

Institutions have historically been required to have assets that they manage on behalf of their clients, and which are held independently by a third party, a custodian.

Deloitte summarises that a custodian’s role is “to safeguard assets” and therefore it is only natural, as banks and asset managers look to invest in Cryptocurrencies and Digital assets, that custody services are being sought.

There is a selection of companies offering custody services such as Bitgo, Coinbase, Digital Asset Custody Company, Gemini, itBit, Kingdom Trust and Xapo. However, these companies are largely unknown by many traditional asset managers. Goldman Sachs and Fidelity are now offering custody services too, but what we are beginning to see are new custody service providers with well-known backers. Most importantly, they have the added protection of having the assets that they look after insured.

Anchorage, having received backing from the legendary Silicon Valley investment firm Andreessen Horowitz, has been offering insurance on all assets that it holds as a custodian. Anchorage has used insurance broker Aon to arrange its insurance cover.  Knox, in which Fidelity invested in 2018, is also offering full insurance on any Digital Assets that it provides custody services for. Knox is based in Canada and has arranged its insurance cover via insurance broker Marsh McLennan. Jennifer Hustwitt, a senior vice president at Marsh, recently commented that “Over the past six months, we have seen a net expansion of insurance capacity as the technology continues to mature and regulatory frameworks emerge.”

The provision of fully insured custodian services will prove to be extremely important if more asset managers are to have greater involvement in Digital Assets.



6 Months Ago

Thus, as to the benefits of using Blockchain, the jury would appear to be still out.

However, stock exchanges do face a real challenge as Ernst and Young reported the number of companies that are filing to be publicly listed continued to decline in the first two quarters of 2019. Therefore, securities requiring the services of a stock exchange reduces.

The promise of a wave of new tokenised securities or as some call them, digital shares look appealing. According to World Bank statistics, the total value of securities trades in 2018 was $68.2 trillion. The Bank of International Settlement reported that the total value of Over The Counter (OTC) derivatives in 2018 was $544 trillion.

If the derivatives market starts to digitise its assets, enabling them to be traded 24/7 on a digital exchange, the opportunity is enormous. So, with this prize insight, people will continue to see innovation and new technology, like Blockchain, being harnessed, which possibly explains why traditional stock exchanges are embracing Digital Assets. 


Facebook reported, in its Q1 2019 press release, that it now has 2.38 billion monthly users across its various apps - Messenger, WhatsApp, Instagram and Facebook, with 2.4 billion people using one of these apps every day.

This is a rise of 8% over the last year in which Facebook had 1.56 billion logging on every day (Facebook itself is also an increase in the last year of 8%).
As the Chinese Crypto Czar pointed out, “The most a central bank could do to prevent Libra from entering a country would be to ask all of their payment institutions and commercial banks not to process any transactions which are related to Libra. Still, there are a few back channels through which users could circumvent the ban to purchase Libra, look at underground Bitcoin trading in China as an example of how it could work”.
Indeed, look at the success the Americans had when they introduced prohibition in 1920, as by 1925, in New York alone, there were over 100,000 illegal bars. Not only was there a huge loss in revenue from the tax on ‘booze’ not being levied and collected, but there were 1,500 federal agents who had to be paid and who was meant to enforce prohibition. Then, there was all the loss of life and social unrest from gangsters, such as Al Capone, who roamed the streets in the USA. In many ways, we have similarities now as, on a global basis, the fight against drugs is estimated to be costing over $100 billion p.a.
Michael Corleone in The Godfather Part II said, "keep your friends close, keep your enemies closer". Maybe rather than fight Libra, governments need to look, listen and learn.
Christian Legarde (former Managing Director of the International Monetary Fund) said in a speech in Singapore earlier this year, “A new wind is blowing, digitalization. In this new world, we meet anywhere, at any time. The town square is back—virtually, on our smartphones. We exchange information, services, even emojis, instantly, peer to peer, person to person. We float through a world of information, where data is the “new gold”—despite growing concerns over privacy and cyber-security. A world in which millennials are reinventing how our economy works, phone in hand”.
Governments want to own and control Digital Currencies, as opposed to these currencies being the property of a corporation such as Facebook. A consequence is that governments could face a loss of control over their citizens, as potentially there is competition with state-backed currencies like the US$. Digital Currencies offer governments the ability to track spending and collect taxes, as Digital Currencies offer a new set of tools to influence the money supply. This is now even more relevant, especially in the current era of low-interest rates.
As an aside, Facebook’s 1st Quarter results for 2019 display that the tax on earnings rose to 30% since Facebook has included the Federal Trade Commission investigation which it thought could result in a fine of  $3 to $5 billion.
Is this another way for Facebook to say that being fined is part of it doing business, and therefore is treated as a tax on its normal activities? (as either way the government gets the money). Given the state of politics in most...

Imagine 2019 is 1999  

What do you remember? The dotcom boom perhaps?  https://en.wikipedia.org/wiki/Dot-com_bubble. Technically, the dotcom boom began in 1994 and finished in the year 2000. I was 30 years old in 1994, and 36 in the year 2000.
You may also remember in 1999 several Initial Public Offerings (IPOs) https://www.marketwatch.com/story/ipos-shatter-records-in-1999. A record number (510 companies) launched themselves and their equity on the stock market raised, back then, a staggering $66bn. I wonder where they are all now? This is worth studying, as the dotcom failure rate is close to 99%.
When we jump back to 2019, we see already more than 500 IPOs in the worldwide market:
https://www.ey.com/Publication/vwLUAssets/ey-global-ipo-trends-q2-2019/$FILE/ey-global-ipo-trends-q2-2019.pdf , and record amounts of new capital being raised to back these new platforms and ideas.
So, what is happening here? The news makes us wonder
Is there something familiar happening? Have we seen all this before? Is history repeating itself or, at least, rhyming? None of us knows, but many of us sense that something equivalent to back then (1999) is happening once again. The ‘Power of Weak Signals’:
Dotcom is no longer the phrase of the moment, now that we have AI, Bitcoin, Blockchain, Climate Change, Crypto, Cybersecurity, FinTech and SaaS. Even social media is a passé phrase today. Most of these new buzzwords, few of us understand. Alongside these new ideas, platforms and start-ups we have a new workplace, which many of the millennials hold in their hearts as a place to aspire to work - namely WeWork, itself with more than 500 locations worldwide: https://en.wikipedia.org/wiki/WeWork
But somehow, we know something is wrong at WeWork, which is a property company painted with ‘go-faster’ technology stripes. It’s not a tech company but thinks it is.
WeWork’s valuation has fallen 80% since January and whilst $47bn is way too high, is $10bn too low? The more you study the WeWork S1 filing for its IPO, the more you think something just doesn’t seem right here:
https://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm, and here: https://www.theverge.com/2019/8/15/20806366/we-company-wework-ipo-adam-neumann
So, if we return to 1999, everything was ‘rosy’ with dotcom and everyone was to be a millionaire - compared with 2019 when everyone is to be a billionaire!
Let’s look back then at when the UK market peaked (30th, December 1999) with the FTSE100 reaching 6950 -  https://www.telegraph.co.uk/finance/markets/11432504/FTSE-100-breaks-1999-record-to-hit-all-time-high.html
A number not to be seen again until 2015. Did it take the FTSE100 fifteen years to recover from the dotcom crash? Perhaps.
The FTSE100 is primarily an international index of companies where 75% of income comes from global markets outside the UK. This makes it a good average, a good yardstick to feel where global markets reside. With more than two trillion pounds of market cap it represents a fair share of the £67 trillion global GDP market, at almost 3%:
 So, where does all this leave us with 2020 fast approaching? Is there some kind of tech correction coming? When we examine Bitcoin 2009, is this the equivalent of World Wide Web 1989 by Sir Tim Berners-Lee? Was the Ethereum 2015 ICO like the Netscape IPO 1995?
In 1998, Amazon stock collapsed at 90%: https://www.cnbc.com/2018/12/18/dotcom-bubble-amazon-stock-lost-more-than-90percent-long-term-investors-still-got-rich.html.
In 2018, the so-called Cryptos...


Up to June 2019, Apple has made an EBIDTA (Earnings Before Interest Depreciation Tax and Amortization) of $76.5 billion (which has been a decline of 5.24% on the previous year) as its sales of the iconic iPhone start to face stiff competition and mobile phones reach saturation.

Indeed, according to GSM Intelligence (which monitors 1,400 telecom networks globally), there are 5.1 billion mobile subscriptions and 9.2 billion connections - yet the United Nations states the total world population is only 7.1 billion.
However, Apple is sitting on a cash pile of over $200 billion, which is equal to that of the world’s two largest hedge funds — Bridgewater Associates and AQM Capital Management — combined. Apple has 1 billion customers globally and, to date, has sold over 1.4 billion iPhone devices worldwide – giving it a huge scale and international distribution. It has also been reported by the FT that Apple has 420 million monthly subscribers  - Apple Music has overtaken Spotify, iCloud services and Apple TV (which has just had a relaunch). The subscription is going to be available for only $4.99 per month.
So, why would Apple wish to get involved in the financial services sector? Apple Pay was launched back in October 2014 and is available on 900 million iPhones worldwide, but only 43% (383 million people) are using it. However, it is currently available in 24 countries, being accessible to more potential users who follow the BNP Paribas Fortis’ alliance. Apple Card, too, has recently been launched (August 2019) and the credit card is available in a digital format, coming in as a titanium card which offers cashback of 3% if you buy Apple products. The card has built-in digital and facial recognition security and has been launched in conjunction with Goldman Sachs and Mastercard - interestingly promoting that customers’ data, in terms of their spending patterns and history, will not be stored or divulged. In a recent article from Forbes, it was calculated that if Apple were to receive just 20% of the likely revenue generated by the Apple Card then, by 2022, an additional $1.1 billion revenue could be generated for Apple. However, being in partnership with Goldman Sachs. Apple is also active in Asia  - it has been offering finance in China, teaming up with Alibaba to offer interest-free credit to buy an iPhone.
By 2022 the financial services sector is predicted to grow to $26.5 trillion (a CAGR 5.9%) and interestingly Accenture has found that, of 18-34 year old’s, “80% are interested in integrated propositions from financial providers and non-financial vendors and 87% of them state that their mobile devices are their principal device for transacting online. So, who better to turn to than a well-known global brand such as Apple?
The world economy is increasingly turning digital and mobile, which Apple (to a great extent) has enabled and encouraged with its iPhone, iPad and Mac, etc. So, it is no surprise that Apple filed a patent, back in 2009, which was granted in 2014 to use tokenisation on Apple’s devices. Was this little-known interest in tokenisation due to Jennifer Bailey, Vice President of Apple Pay, who recently told CNN “We’re watching cryptocurrency, we think it is interesting. We think it has long-term potential”.
Apple Tokens - If used by their 420 million...

30% of the global, tradeable bond universe is being sold - with a guaranteed loss attached to the coupon. That’s an eye-watering $US16.7 trillion”

One wonders, why some cryptocurrencies are not significantly higher than they are? There are further factors to consider:

At some stage, these debts need to be dealt with. But how?


  • Default on the debt
  • Pay off the debt
  • Inflation to reduce the real impact of the debt mountain


To pay off the global debt by economic growth seems like a tall order to say the least, given the historic track record of the global economy in racking up debts. This leaves us with default or inflation, both of which could lead to a world recession, massive asset price volatility and, more wrongly, a huge loss in confidence. However, would this backdrop of economic chaos pave the way for a new financial order (which is less reliant on the reckless spending of governments) and quantitive easing, which has driven interest rates to almost ZERO, so fuelling this debt bonanza?


In such a crisis will we see Blockchain-powered Digital Currency backed by real assets emerge (not just other fiat currencies), which cannot be manipulated by governments and politicians, and with which the populous can both transact with and trust?