On Tuesday

In recent years retailers have been focusing on loyalty reward schemes as a way to entice their customers and encourage them to buy more.

According to a study by the Harvard Business School, increasing your customer retention by just 5% can have outsized benefits on profits of up to 95%! However, low redemption rates are a big problem for providers of loyalty schemes, as it can result in a lack of engagement. Loyalty schemes are often not that popular with companies’ accounts’ departments as they can create a large, intangible liability on a company’s balance sheet. Loyalty scheme members that do not redeem their rewards are not actively engaged but, on the flip side, members who do redeem points typically spend more and have greater satisfaction with loyalty programs.

According to Mckinsey, US companies spend $50 billion a year on loyalty schemes alone, and if you get it right, loyalty programs can generate as much as 20% of a company’s profits! However, with increasing online shopping, and particularly shopping on mobile devices, consumer retail behaviour has been changing dramatically and reward schemes seem to have lost some of their appeal. Customers often cite the difficulty of being able to redeem rewards and the fact that they may have many different loyalty schemes with few of them operating together. This is where Blockchain technology is able to help bring multiple brands together, offering a wide range of products to consumers in order to redeem their reward points.

Blockchain technology allows a customer to store all points in a single wallet rather than trying to manage these multiple schemes. It would be possible to create a solution enabling all schemes to have compatible rules for acquiring and redeeming points from different loyalty schemes. It is thought that Facebook’s proposed Digital currency, Libra, could be a real boost for loyalty schemes, as it may allow some form of global standard to develop for smaller schemes to then adopt. One challenge Facebook has is that regulators do not like the collection of data from individuals without the user being compensated. However, if Facebook started to pay it’s 2.3 billion users in Libra for clicking on content, it could be a way to satisfy regulators and, in turn, create the world’s BIGGEST loyalty scheme overnight! 

Loyalty schemes using Blockchain technology and Smart Contracts can automate many of the transactions, making the running of loyalty schemes autonomous. Data can be stored in a highly secure manner using a Blockchain platform, enabling the privacy of users’ information, which will increase the trust of the brand among these users. Implementing joint loyalty schemes with other brands becomes easier because Smart Contracts can handle the transferring and converting of reward points while validating users and redeeming these points. Furthermore, the brands/ retailers are not giving up control or access to their most important asset – their customers’ data!


Loyalty Programs
Deutsche Bank finally revealed what the market had been expecting for years, that it needed to reduce its cost base and become leaner and fitter against a backdrop of anaemic global growth.

This has led to Deutsche Bank cutting 18,000 jobs.
In April 2019, Christine Lagarde, Managing Director of the International Monetary Fund, told CNBC that cryptocurrencies and financial technology developments are “clearly shaking” the banking system. She also added, “We do not want innovation that would shake the system so much that we would lose the stability that is needed.”
However, like the story of the emperor who wore no clothes, the real problem is DEBT at a personal, corporate, and national level - and it is a global problem. Furthermore, with historically low-interest rates, the options available to central banks to stimulate economic growth in the event of an external crisis are extremely limited.
To give you a feel for the truly horrific state of affairs of how utterly out of control the debt in most major countries is, look at the US Debt Clock which illustrates in “real-time” how debt mountains are piling up in a selection of the very biggest countries in the world.
While the national debt numbers are a cause for concern, what is truly alarming is the foreign debt - otherwise referred to as the external debt as a percentage of Gross Domestic Product (GDP). This is the ratio between the debt a country owes to non-resident creditors and its GDP. External debt is the part of a country’s total debt which was borrowed from foreign lenders and is, therefore, vulnerable to the confidence foreign investors have in the ability of another country to keep paying its own debts.
The amount of debt owed to foreigners as a % of GDP for different countries has to be of concern - France 201%, Germany 145%, Italy 136%, Japan 105%, USA 87% and Holland with a massive 457 %. Asking for your money back, or not lending an indebted nation any further capital, potentially is one of the levers that foreign investors have in the event of the escalation of trade wars, disputes, and disagreements.
As we have seen, geo-political uncertainties can also trigger an enormous financial crisis e.g. the financial crash in 2008, and was also demonstrated by the spike in the price of oil in the 1970’s and the Wall Street crash in 1929 (which led to the global depression in the 1930s and was arguably the precursor to World War II).
Deutsche Bank estimates that the impact of the U.S - China trade wars has already resulted in over USD 5 trillion from the financial market, and the two largest economies in the world have yet to agree on terms. Given the uncertainty in Europe over Brexit, Greece has just voted-in a government that is going to reverse the spending cuts and tax hikes that it agreed to, as part of its financial bailout. If this leads to Greece getting back into financial trouble, will the Germans agree to bail it out again? Meanwhile, Italy looks to be headed for a confrontation with the European Union as its national debt spirals out of control to over $2.3 trillion (which is the...

Global Debt

Last Tuesday

Blackrock, the biggest asset manager in the world, with over $6.28 trillion under management, is capitalised at $72.billion and, during the quarter ending 31st March 2019, generated $3.246 billion of revenue.

Facebook is valued at $550 billion and, as at March 2019, it had over 2.38 billion users and generated $15.08 billion of revenue. Blackrock only has $6.49 billion of net cash and short term investments, compared to Facebook’s $41.12 billion of cash and short terms investments. 

Despite Blackrock’s size and global reach - having offices in over 100 countries- it is still very dependent on the Americas, as they make up 62% of the firm’s funds under management. Compare this to Facebook, where it is estimated that more than half of the US population (169.5 million people) use Facebook out of its 2.3 billion user-base. It is obvious that Facebook not only has greater distribution i.e. more direct clients that Blackrock, but Facebook has far greater penetration in faster-growing markets outside of the USA. 

Why is all this important? Well, quite simply, if you have the ability – cash and the type of global distribution and brand that Facebook has  - then even the biggest asset manager in the world needs to pay attention since Facebook has announced it wishes to launch an Exchange Traded Fund (EFT). The Facebook ETF will be based on Libra, which is a Digital Asset backed by a basket of currencies. Therefore it is not completely dependent on the fortunes of the US$, which it would be if it were backed by an asset that is priced in US$ (like gold), which is what the Editor of Forbes magazine is calling for.

Libra’s acceptance has received a boost from the third biggest economy in the world, Japan, as the Japanese Financial Services agency believes that Libra is unlikely to be a Cryptocurrency. It has stated that Libra will more likely be categorised “as general money transactions and remittances.”

The massive profits that fund managers have generated for years and their annuity style income (they earn a fee based on the funds that they manage, so having much greater visibility of their revenue) has meant that asset managers enjoy a high PE ratio. Blackrock’s PE is currently 16.8, although this pales into insignificance compared to Facebook’s current 23.35, as investors believe that Facebook is able to grow its revenue and profits faster than many other public companies!

If Facebook focuses more of its attention to asset management, and Libra is just the start of a series of products and services Facebook is going to offer its users, then traditional managers need to pay very careful attention. Facebook has both the cash and the followers to become a substantial asset manager extremely quickly, and also has massive exposure in parts of the world which are growing fast, and where its younger citizens are already digitally engaged!


Asset Management

2 Weeks Ago

On the face of it, why would Ripple (a cutting-edge technology company) want to invest in MoneyGram, which is a USA-quoted international payment transfer business?

Surely, Ripple has enough on its plate trying to replace the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the platform that has been used by global banks since 1973 to make international payments? Ripple’s token price increased by over 35,000% in 2017, sparking a Cryptocurrency frenzy globally.

While MoneyGram can trace its roots back to the 1940’s, it was not until 2004 that it was trading as a separate entity. Unfortunately, despite its well-known brand internationally, it has been struggling of late as it looks to repay its $902 million of debt. It was also fined $120 million in the USA for failing to stop potential fraudulent payments. In January 2018, it had a $1.2 billion bid from the Chinese company Ant, blocked on the basis that it would enable the Chinese to have too much financial information on US citizens. MoneyGram’s share price has fallen from $17.81 in April 2017, to $1.67 in December 2018, although on the announcement of the investment by Ripple it did rise by 150% to $3.64.

While Ripple claims that it can help MoneyGram improve the efficiency of payments, cutting costs and reducing the time it takes to send money globally, I suspect it is MoneyGram’s existing distribution network that appealed to Ripple…..

Will we see more new Crypto firms buying into more “old money” companies as they look to introduce their new technology into existing customer-bases?


Alternative Investments
Japanese railways are looking to go cashless and potentially introduce payments using Cryptocurrencies.

The Japanese equivalent to Amazon, Ratken has announced that it is going to provide the technology to help East Japan railway customers pay digitally, as opposed to using cash.

The Japanese government has been trying to encourage its citizens to use less cash and increase the amount people pay using digital methods to 40%. Currently, 20% of transactions in the Japanese economy are paid digitally, compared to South Korea where 89% of transactions are paid digitally, and in China, the figure is 60%. Indeed, some companies, like Paypal in Japan, have resorted to extreme measures such as giving away 10 billion yen ($91million) to encourage people to move away from cash and go digital.

The Ratken East Japan Initiative is looking to enable 5,000 trains stations and 50,000 buses, as well as 600,000 stores, all to be in a position to accept digital payments.

Given the growth in Chinese tourists (7.5 million in 2017), shops and restaurants are also looking to be able to accept cashless payments. These tourists are more likely to want to pay digitally, as in China only 40% of transactions are paid for by cash. Alipay and WeChat have had huge success in converting the Chinese population to pay digitally, so Chinese people typically to do not carry around large amounts of cash.

To meet this demand from merchants to go digital J-Coin, which is a new digital currency payment platform, has been launched in Japan by Mizuho Bank in conjunction with 60 other financial institutions.

Being able to pay digitally cannot come too soon for Japan as it welcomes the World Rugby Cup this autumn and then the Olympics in 2020. It is expected both sporting spectacles will attract a huge number of foreigner visitors, many of whom will prefer not to use cash simply because it is more convenient to pay digitally.


Digital Payments

A Month Ago

Visa, who according to Forbes, handled over $11.2 trillion of payments in 200+ countries last year, is now looking to attack the international money transfer market - which is said to be valued at over $125 trillion.

Since 1973, Society for Worldwide Interbank Financial Telecommunications (SWIFT), headquartered in Belgium, has dominated the market for international payments. However, SWIFT uses old technology, making it relatively slow and expensive to move money around the world, which is why Ripple is arguing that it is able to replace SWIFT, as Ripple’s Blockchain-powered solution is so much faster and cheaper. If indeed Ripple is successful, it would make the business extremely valuable. This may explain why Ripple rose in value by over 35,000% in 2017 and caught the imagination of many Crypto-enthusiasts, as well as sparking a wave of “Fear of Missing Out” (FOMO) across dinner tables around the world and people searched for the next token that could offer them the hope of early retirement.

Visa has also announced that it is going to expand the number of countries from not just the UK, but to six more countries - Spain, Germany, France, Italy, Ireland, and Holland - by now enabling Coinbase to expand its Crypto to fiat debit card for clients. The card allows users to spend in Euros and Sterling, then their Cryptocurrency holdings will automatically be sold to meet the fiat equivalent cost of the purchase. The Coinbase card is attractive for those that travel overseas, as it will reduce the normal expensive foreign exchange fees that many other cards levy. Unfortunately, so far the reaction has not been that positive, with the card scoring only 2.4 on the Google App store. However, new upgrades are promised, which hopefully will improve the customer experience.

Initiatives, like the above from Visa, have to be welcomed as they are driving down the costs of sending and spending money globally while making it much easier for holders of Digital Assets to access their investments in easy and convenient ways. It ought to make it easier to redeem digital loyalty rewards, which are being touted as an important market for Digital Assets. Companies are looking to use Digital Assets to attract new customers while incentivising existing clients to do more business. We are seeing companies offering to pay for clients’ data, as opposed to just collecting it and then reselling it to advertisers - Google and Facebook have been doing this for years!

IOTA has been giving tokens to drivers of Jaguars and Land Rover vehicles during tests in Ireland, it collects information about road conditions and traffic congestion. Facebook has just announced a project called Study, where it will be paying clients for their data (possibly using the soon-to-be-launched Facebook Digital currency, Globalcoin).

Digital Money
Digital Assets
In January 2018, KodakOne announced that it was going to launch the Kodak coin and, as a result, Kodak Inc share price went up 120%.

The basic idea behind KodakCoin is to use Blockchain technology to help photographers manage their photos by creating permanent, immutable records of ownership. It was believed that KodakOne would make it significantly cheaper and faster to register and sell digital images. The Platform was said to offer a simple, transparent Blockchain-powered worldwide royalty accounting, licensing, and payment system. The KodakCoin was never a part of Kodak Inc but was a separate company that licensed its name from Kodak Inc. While KodakCoin’s Initial Coin Offering (ICO) never proceeded, a year on, KodakCoin has generated over $1million in revenue in its beta-test trials.

Kodak Inc is back in the press and this time it is Kodak, the company that
invented the digital camera, and then decided not to commercialise it. This time it is looking to create a Blockchain-powered platform to store and manage documents, all held in the cloud. Kodak claims that its new platform could generate as much as 40% in terms of cost savings, using Blockchain technology.

So second time around, no ICO, no huge increase in Kodak’s share price, but just another example of a global brand using a Blockchain to offer its customers a service to help make business processes hopefully more efficient and cheaper.

Digital Assets
The images below highlight the dramatic results earlier this year in the Philippines, when over 45 tonnes of plastic and rubbish were collected off a beach in Manila Bay.

Plastic Bank and Bounties Network have been encouraging people to collect rubbish and plastic and rewarding the collectors by paying them in Ethereum (a Cryptocurrency). These two companies then partnered with a local Philippine cryptocurrency firm, which itself took the Ethereum and converted it into the Philippine peso.

SC Johnson, the makers of Raid, Pledge, Kiwi, Glade, etc, has been involved in a number of projects in Indonesia, where it has been giving away Digital currencies in exchange for local villages to collect plastic waste. According to a press release, SC Johnson teamed up with Plastic Bank to establish eight plastic recycling centres and is giving Digital tokens as an incentive to pick up rubbish off their local beaches, as “people can then use the tokens to buy needed goods and services – reducing the risk of loss or theft”.

These are great examples of how Digital Assets are being used to encourage positive behaviour and help reduce the amount of rubbish in our communities. This could not be further from how some people few Cryptocurrencies being the preserve of drug lords, terrorists, and generally unsavoury characters.

A little closer to home, in 2017, the
Hull Coin was launched. Whilst it cannot be bought, it can be earned by doing “good work” for Hull’s local community and then spent in local shops to receive a discount. Other towns in the UK have also looked at issuing local currencies, but as yet we have not seen widespread adoption.


At Bond Street underground station recently, what the Americans call an Automatic Teller Machine (ATM) or a cash point machine in the UK, someone tried to convert their Bitcoin into pound notes and it began issuing so much cash the withdrawer could not cope…

As you can see, a security guard tried to keep shoppers and commuters at bay, who looked on in amazement, as used bank notes littered the floor.

The ATM turned into what looked like a Las Vegas one-arm bandit machine that had hit the jackpot, and bank notes were soon flying out of the machine all over the floor… If nothing else I am sure it cheered up the commuters and certainly distracted the shoppers on Oxford Street!

Digital Assets
Facebook is potentially going to offer their staff to be paid in Globalcoin (which is potentially the name for Facebook’s soon-to-be-launched Digital currency) on a monthly basis i.e. as their salary, further illustrating how Digital Assets are coming into our day to day lives.

It is rather ironic that Facebook has been selling advertisers’ data it has been gathering on its clients – generating $16.8 billion in 2018 -  and trust in Facebook has been plummeting. In a recent article, it was claimed that “more than 60% of Americans do not trust Facebook with their personal information”, so why will Facebook customers buy and use Globalcoin? Surely for any medium of exchange – a currency for transactions - one needs to have confidence and trust in the currency? It is potentially for this reason that Facebook has, allegedly, agreed to cede control of the governance of its new Digital currency to an independent board.

Meanwhile, the rollout of Globalcoin is gathering momentum, as it has been reported that Facebook has been in discussions with the Commodity Futures Trading Commission (CFTC) in the USA to help smooth the way for Globalcoin, ready for its launch. It is understood that Facebook is also in discussion with Visa and Mastercard.

Mark Zuckerberg, Facebook’s CEO, recently commented on the future of Facebook saying: Payments is one of the areas where we have an opportunity to make it a lot easier… I believe it should be as easy to send money to someone as it is to send a photo.

Globalcoin is a very significant evolution for the  Digital Assets’ sector, as it will allow
Facebook’s 2.3 billion monthly users, as well as its 7 million advertisers, to use this currency and bypass the traditional banking system. But only time will tell if Facebook’s customers' trust is sufficient to using its new Digital currency.

P.S. As if Facebook needed it! It is being reported that Facebook is going to operate Globalcoin on a closed Blockchain, and charge the organisations operating each of the
100 nodes $10 million, so generating an extra $1 billion. This additional income will be a drop in the ocean for Facebook as, at the end of March 2019, it was sitting on over $41 billion of cash!

Data Analytics
Social Media
This podcast interview with the founder and CEO of eToro, Yoni Assia, is over 1 hr long, but it is worth listening to https://pod.link/1434060078.

eToro was only established in 2007 when Yoni and his brother thought there had to be a more user-friendly way for people to be able to buy and sell shares, currencies and other financial assets. They have achieved this by creating what they refer to as a “social market”. The eToro platform enables someone in Hong Kong to find an investor in Germany (that buys and sells German smaller companies) and then follows and automatically invests in these same companies in the same proportion. This type of ‘mirror-trading’ is also known as “copy trading” and has been popular for a number of years, being possible to do copy-trading with relatively small sums of capital. Typically, the person who is initiating the trading ideas and strategy will earn either a % of the profit (from the person who is mirroring the trade) or a % of any brokerage that is created.

However, I digress - what is also interesting in the podcast is that Yoni was involved in Colour Coins in 2014 which, in effect, were what we now refer to stablecoins i.e. Digital Assets pegged/linked to real assets - $, £, gold, etc. The Colour Coins were run on the Bitcoin Blockchain, as Ethereum did not yet exist. When he was only 19, Vitalik Buterin (Ethereum’s founder) helped Yoni with some of the initial codings for Colour Coins. Vitalik decided that digitising assets was a great idea, but the concept needed a new blockchain - so he invented Ethereum.

From 2015 to 2016, eToro grew by 600%, and then from 2017 to 2018 by a further 400% (according to this podcast). eToro has now become a very successful company, which has over 10 million clients who, in 2018, traded over $1 trillion worth of assets. Yoni believes that, in the same way Bitcoin has proved it can replace cash as a medium for people to trade, Smart Contracts has the ability to replace and totally disrupt the legal system. Smart Contracts can replace many intermediaries and allow computer/machine-driven execution of trades and agreements, which will be cheaper, faster and not prone to human error.

eToro has been offering the ability to trade Bitcoin for over 5 years and, during Cryptocurrencies’ bull-run in 2017/18 Ethereum went from $4 to over $350 and Ripple increased in value by over 35,000% in a year. This encouraged people to open accounts with eToro to such an extent, that eToro signed up over 20,000 new customers in a single DAY! Given eToro’s success in traditional and Digital markets, how much credence ought one pay to its CEO’s pronouncement, that financial markets are going to radically change? The combination of Digital Assets and Smart Contracts disintermediate the financial services sector and could result in 66% of the $150 Trillion global bonds and equities becoming digitised.

Certainly, younger investors are spending increasing amounts of their time online, usually on a mobile phone, and therefore to engage with them, financial service providers will need to communicate and offer services...

Digital Assets
In the UK, Digital payments overtook cash payments for the first time last year, and the trend of using less cash when shopping looks set to continue, with now over 63% of UK consumers using contactless payment.

Contactless technology was invented by Nikola Tesla in 1898, using radio signals to control a model boat in New York. However, it took until 1995 for contactless tickets to be first used in Seoul in Korea to replace bus and rail paper tickets. Finally, in 1997, Mobil petroleum launched “Speedpass” to enable customers to pay for fuel at petrol stations in the US.

However, while cashless payments are proving ever popular, the costs of using even a debit card can be nearly 3%, especially if used overseas. It is estimated that soon credit card costs in the US are projected to exceed $110 billion, although this is largely as a result of the $1 trillion of debt that is held on credit cards.

We are seeing more merchants i
ncreasingly accepting Digital currencies as a form of payment, as illustrated by Whole Foods, Bed Bath and Beyond, Office Depot, Nordstrom, Jamba Juice, Barnes and Nobel, all announcing that they will allow customers to pay for goods using Flexa’s Spedn. The Spedn App creates a quick response, “QR” code, which you can then scan at the check-out, automatically transferring in the local currency, and taking the equivalent amount from your selected cryptocurrency from your Spedn digital wallet.

Spedn potentially is a much cheaper way to buy goods and services when overseas. If it can also accommodate Digital Assets that are given to customers as part of loyalty and incentive schemes, hopefully, we can all start using those old Airmiles, Avios, Nectar, Starbucks points, etc., provided such firms also digitise their platforms.
Meanwhile, last week at Consensus, a Blockchain conference in NYC, the banners above were displayed.

Once we see the likes of eBay accepting Cryptocurrencies as a form of payment, how long will it be before we see Amazon also do the same?

Digital Currency
Financial Services
The 19th of May 2019 could prove to be an inflection point for the mass adoption of Cryptocurrencies/Digital Assets.

A firm called Zulu Republic (Zulu) based in Zug, Switzerland, announced that it was now possible for WhatsApp’s 1.5 Billion users to now transfer Digital Assets, using their Lite.IM wallet. Not only is it now possible to carry out Digital Asset transactions over WhatsApp, but Zulu will also pay users in Digital Assets if they make referrals to other users.

Zulu was set up in 2017, and initially considered launching an Initial Coin Offering (ICO), but managed to attract sufficient private funds. Zulu was also concerned about the regulatory uncertainty around ICOs decided not to carry out an ICO. In order to promote itself to a wider audience, Zulu carried out an “AirDrop” and gave away tokens to people who subscribed to one of their wallets and, according to etherscan , over 4,800 subscribers now have Zulu Tokens. However, Zulu’s systems and scalability are now really going to be tested, as it is possible to use them to over WhatsApp, and having tried to look around Zulu’s website, it keeps crashing - the omens do not look good!

One wonders if Facebook has decided to use Zulu and its Lite.IM wallet as a trial, while it finalises the launch of its own cryptocurrency (which is meant to be launching later this year also on WhatsApp)? Once people are able to easily use Digital Assets to pay for goods and services on a social media platform like WhatsApp, let alone Facebook, with over 2.3 billion users of which 1.56 billion log on every day, will we see many other global brands more fully embrace this New Asset class, so that point of inflection will have occurred?

Social Media
The American Securities Exchange Commission (SEC) is not making the US a Crypto-friendly jurisdiction for businesses looking to raise capital, as it turns its attention to various companies which have carried out Initial Coin Offerings (ICOs).

The SEC has already taken action against a variety of companies, a list of which can be found on its website Cyber enforcement actions. 

This week the Canadian social media site, Kik, that targets teenagers, carried out an ICO and claimed that it has spent over $5 million to defend itself against the SEC. Kik has argued that it has not broken US securities regulations, as it did not issue security when it launched an ICO and raised nearly $100 million. 

In December 2018, Basis, which was a stablecoin and had raised over $130 million, closed down and handed back money to investors, which it was able to do as it was holding mainly US$ as this is what it was pegged/linked to. However, this is not an option for many of the ICOs that were funded by people swapping Bitcoin and/or Ethereum for tokens, as the price of Bitcoin and Ethereum has fallen significantly since some of these ICOs were launched. One of the leading authors on Blockchain, Alex Tapscott, has been fined this week by the SEC. Tapscott had to relinquish a potential $2million profit he was due from Next Block Capital for allegedly potentially misleading investors, as well as being personally fined $25,000. 

The SEC issued what has been reported as the first ICO enforcement action against a company that has, in effect, “whistle blown” on itself. The company concerned is called Gladius Network LLC, and carried out an ICO in 2017 without prior registration with the SEC. Despite the SEC releasing guidance on ICOs, which some had hoped would clarify the regulators' stance, others fear that the guidance highlights possible causes of concern for a number of firms that have already carried out ICOs, and may indeed discourage companies from promoting ICOs to investors in the USA. 

The SEC has already taken action against people endorsing/seen as promoting ICOs, by bringing charges against professional boxer Floyd Mayweather Jr and music producer Khaled Khaled (known as DJ Khaled), for failing to disclose payments they received for promoting an ICO they were involved with. 

The SEC is casting its regulatory net further (and remember, unlike the FCA in the UK, the SEC sometimes takes retrospective action) to target advisors which helped organisations launch ICOs, or those that may prove to have manipulated the price of certain tokens. While this may be uncomfortable for some existing parties, it hopefully will deter others from breaking the law and in time, help to improve investors and more importantly institutions’
confidence in Digital Assets. 

Despite the SEC action, it has not stopped some companies like Coinbase from successfully signing up institutions for its custody service which now, after just 1 year, has over $1 billion under custody.


2 Months Ago

Coss and ARAX have announced they are going to merge, which is being heralded by some as the first merger of two firms that had issued utility tokens by carrying out Initial Coin Offerings (ICOs).

The combined business will be able to enjoy economies of scale bringing together two management teams and create a much larger utility token for their users.

Coss, which stands for Crypto One Stop Solution, is a Digital Asset exchange based in Singapore, and ARAX is a Digital Asset wallet which supports seven different Blockchains and seventeen Digital Assets and has over 250,000 users.

As the price and the liquidity of Bitcoin and Ethereum (Crypto) have improved, it is now possible for firms that have carried out ICOs to start selling some of their Crypto assets, which could potentially have two consequences. Some of these firms will be sitting on Crypto assets that have become much more valuable in the last few months and are, in effect, “digital Cash shells “, which may well encourage merger and acquisition (M&A) activity.

On the other hand, as these firms now potentially have greater asset value, we could see more litigation. The potential for litigation was laid out recently by US law firm Polsinelli LLP, in their paper entitled “Cryptocurrency Class Action Lawsuits: A New Frontier”

As we start to see Security Token Offerings (STOs), which will potentially be backed by real assets, such as publicly quoted equities and bonds, it will not be too long before we see STOs also being caught up in M&A. Then the lawyers and regulators will need to work out how to equitably combine traditional assets with this new asset class…

Mergers And Acquisitions
Bloomberg reported last year that The Peoples Bank of China (PBoC) was looking to launch its own Digital currency, which would enable it to have more control and be able to track transactions, be able to reduce the Black market economy and even automatically refuse companies loans who had been blacklisted.

The PBoC has registered 78 patents since 2016, according to Bloomberg. In October 2018, PBoC was looking to recruit staff at its Digital Currency Institute, who have experience in software and encryption law. It would appear that China wishes to create a Digital Currency that is centrally controlled, arguably the opposite originally planned for Bitcoin when it was created in 2008!

China is looking to launch its own Digital CurrencyTo be called “Digital Currency for Electronic Payment”, and the governor Zhou Xiaochuan of the PBoC, was recently quoted saying its focus would be on “convenience, rapidity, and low cost in a retail payment system while taking into account security and protection of privacy.”

Meanwhile, ahead of a G20 meeting in Osaka in Japan in June this year, the Japanese have launched a manual for Cryptocurrency regulation as it looks to try and coordinate the approach that countries currently take. In some jurisdictions, regulation is minimal, while others take a more stringent or draconian approach.

Digital Currency
Serena Williams, who has won 23 tennis Grand Slams, has revealed via her Instagram (which has had over 22,000 likes) that she set up a Venture Capital fund in 2014, which has Coinbase as one of its investments.

Coinbase is a US-based Cryptocurrency exchange which was established in 2012. It has over 13 Million accounts, making it the largest Digital Exchange globally and, following its last $300million fund-raise, was valued at $8 Billion.
However, Serena would appear not to be alone, as there has been an increase in the amount invested in Crypto assets as the chart indicates.

According to Crypto Fund research, there are more than 750 different funds which invest in Crypto assets and have been set up as either Crypto Hedge funds or Crypto Venture capital funds. The value of the assets that these funds managed at the beginning of 2019 was $10 Billion which, despite the poor performance during 2018, was $3.5 Billion more than the start of 2018.
For those wishing for more information on 25 of some of the better-known and larger funds which invest in Digital Assets, this link may be helpful.

Nike, the world’s largest shoe manufacturer and the most valuable apparel brand in the world, has filed a trademark “CryptoKicks” which could lead to it launching its own Cryptocurrency.

This rather bold claim is on the back of Nike’s trademark application, which states “Financial services, namely, providing a digital currency or digital token for use by members of an online community via a global computer network; facilitation of financial transactions using unconventional currency systems and bartering...”

Interestingly, earlier this year, Nike launched trainers that lace themselves, called HyperAdapt. Therefore, will CryptoKicks support an incentive scheme for people wearing these trainers? After all, Nike apparel, with its distinctive logo, is as a form of advertising medium while being worn. So, the more you wear your trainers, the more CryptoKicks you could earn!

Facebook is looking to launch Facecoin on WhatsApp in India, but will Nike beat it and have CryptoKicks up and running before Zuckerberg is out of the blocks?

Nike, like Facebook, has a global audience, who are using their goods and services on a daily basis and both firms need to stay relevant, engaged, and keep the attention of their customers while finding ways to encourage them to repeat purchases.

How long before we see other global brands launching their own Cryptocurrencies for engagement, reward, and payment mechanism?

Social Media
In a survey of over 150 universities and endowments in Canada, USA and UK, 94% of the respondents said that they had already invested in Crypto assets - 54% directly and 46% using different types of funds, and only 7% said they were looking to reduce their exposure over the next year.

The survey, although released recently, was conducted in Q4 2018, i.e. when many Digital Assets prices were considerably lower than they are currently, and the sentiment was much more negative to this asset class.

However, the survey revealed that there are still concerns about investing in Digital Assets, such as custody, liquidity, and regulation.

Harvard, with its $39 Billion foundation, is reportedly going to invest $11.5 Million into Blockstack, which will be the first Security Token Offering (STO) that will comply with SEC A+ Regulations, as Blockstack looks to raise $50 million later this year.

Muneeb Ali, co-founder, and CEO of Blockstack PBC, said in the press release:

“Blockstack has been working with securities lawyers to create a legal framework that can enable blockchain protocols to comply with SEC regulations. Our framework is consistent with the latest SEC guidance released last week. Upon qualification, we believe that this offering may be the first time a blockchain project receives approval to access the public U.S. securities markets.”

This is clear evidence that institutional investors have been buying Digital Assets. As we see more   STOs being launched, which will be subject to much tighter regulation, custody providers ought to be able to offer their services to these types of assets. This is important as the lack of custody providers is another reason cited as to why institutions have not significantly invested in Digital Assets to date.

Within hours of the news about the fire at the Notre Dame cathedral Bitcoin owners, were being asked to send funds to help in the restoration of the Parisian landmark.

The appeal was initiated by a French journalist, and Gregory Raymond, on Twitter, he hoped such charitable actions by owners of Bitcoin could illustrate to the lawmakers that Digital Assets can be used for good, and not just the small percentage of criminal uses often cited by regulators and naysayersIt is not just Crypto donations that are being accepted.

The CEO of Kering, which owns Gucci and Queen Alexander,
have given $100 million, and the owner of LVMH has pledged $200 million. Mere mortals can send fiat too as The Friends of Notre-Dame de Paris has a donation page, or one can use GoFundMe or JustGiving.

There has been some backlash to the amount of money raised for Notre Dame which within a few days is over $750 Million as some claimed there are worthier causes….

The French Finance minister is trying to encourage other European countries to develop a set of rules as to how Cryptocurrencies are to be regulated and taxed, following France’s parliament passing legislation last week on how intermediaries handle these assets.

Known as the “Plan d’action pour la croissance et la transformation des entreprises,” (Pacte) it reportedly enables insurance companies in France to invest in Digital Assets.

France is keen to encourage tech innovation and different types of funding that Digital Assets have been using like Initial Coin Offerings. The French are keen to have some controls and regulations, to ensure that investors are protected from fraudulent activities from firms looking to create Digital Assets, but not to protect investors from losses should they occur.

Regulations vary wildly by country within Europe as there is no pan-European legislation. However, local regulators across Europe are imposing restrictions on platforms that do not have the correct permissions to offer brokerage services. The European Union has previously proposed that firms offering services in the Digital Asset sector be subject to its anti-money ‎laundering and countering terrorist financing regulations.‎

As more governments understand the transformational impact that Digital Assets are able to have on their economies, we are likely to see more jurisdictions formulating legislation to encouraging the adoption of Digital Assets. The alternative is, that because these assets are Digital, companies will base themselves in countries that are more accommodative.

Digital Assets
A New York Times journalist has reported that Facebook has been talking to Venture Capital (VC) firms to raise $1 Billion to invest in its cryptocurrency project.

Facebook is looking to launch Facecoin in India on its WhatsApp platform later this year, and it is thought Tim Draper, a VC manager who backed Skype, Bitcoin ( five years ago) and Coinbase, is considering to participate and invest.

Facebook is allegedly going to issue a stablecoin, although it is not clear yet whether it will be pegged/linked to the US$, or to a basket of international currencies. Given Facebook‘s global reach of users, a stablecoin based on a basket of currencies could be an interesting proposition. While the concept of investing in a basket of currencies is not new, as it has been possible to invest in such an asset for a while and there are Exchange Traded Funds (ETFs) securities that offer this exposure, a stablecoin that gives exposure to a basket of currencies would be unique as a Digital Asset.

Mark Zuckerberg, the founder and CEO of Facebook, who is reportedly worth over $66 Billion, has spoken a lot about Facebook’s plans to launch its own Digital Currency, and his company now has over 50 people working on this project, including David Marcus, the former President of PayPal.

Some are predicting that Facebook is looking to offer an alternative to the US$ and emulate the success that We Chat in China has had, offering a money transfer solution. In any event, with Facebook’s financial muscle and strong balance sheet (as it is sitting on over $40 Billion of cash and investments), it is surprising that it is looking to raise more capital. So, what else is this global titan, which has been the subject of so much recent criticism up to now, and will the launch of Facecoin really enable Facebook to attack the lucrative financial services sector?

There could be a much bigger story here as Facebook looks to further monetise our behaviour and gather even more data about what we buy and sell, then selling this data to their advertising clients. Facebook could reward users, based on the number of “likes and shares” people make, whether it be on Facebook, WhatsApp or Instagram, as they are all part of the same organisation. How long though will it be before we see Amazon, Apple, Google Microsoft, etc. issuing their own Digital currencies, bypassing banks and governments, in a scramble to be the go-to Digital alternative payment mechanism?

Social Media

3 Months Ago

Boerse Stuttgart the German Stock Exchange, has launched its Crypto trading App, according to an official tweet dated January 31st.

The App has been developed by FinTech Sowa Labs — a subsidiary of Boerse Stuttgart Digital Ventures in an effort to make trading cryptocurrencies for investors more accessible and easier. A feature of the App is the Cryptoradar. This tool uses artificial intelligence to analyze 250,000 tweets per day from the crypto community, filter them by relevance and present them in a user-friendly format. Users will be able to gain an overview of market sentiment on Twitter in real time and can keep up to date discussions around cryptocurrencies.

Game of Thrones is the most valuable TV show ever produced, and as the graph below shows, it has commanded massive audiences since it was launched in 2011.

But despite its name Ravencoin is fictitious, borrowed from the fantasy world of Game of Thrones, yet has no commercial link to the hit TV show.

RavenCoin was created in January 2018 and did not carry out an Initial Coin Offering but has organically. Today it is in the top 40 in terms of its capital value being, valued at $250Million according to CoinMarketCap.

Despite which Ravencoin has not had a bad track record, and initial miners of RavenCoin will be very pleased to have seen their coins increase in value by over ten-fold in just over a year.