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The last six months has witnessed significant growth in the number of businesses and banks launching cryptocurrency custodial services. These solutions give institutional investors peace of mind that their assets are secure, insured, and under the care of a trusted third party, freeing them from responsibility for safeguarding their cryptocurrency.
Recent Crypto Custodianship Launches
According to research by the Bank of New York Mellon, there is increasing demand in the market for a traditional, established custodian to provide secure storage of cryptocurrencies. For many it is the bridge that will support institutional capital moving into the cryptocurrency market. There have been reports of major banks testing and in some cases rolling out crypto custody solutions.
Most recently, Swiss investment bank Vontobel launched the ‘Digital Asset Vault.’ The service allows Vontobel’s clients, which include over 100 banks and wealth managers, to issue instructions for the purchase, custody and transfer of digital assets integrated within their familiar banking infrastructure and regulated environment. The German stock exchange Börse Stuttgart has launched a custody service for digital assets. State Street, Fidelity and Coinbase also offer services.
Regulation in the U.S. requires advisers to keep client funds with a qualified custodian. Across the pond, the European Securities and Markets Authority (ESMA) has raised the issue that there is no harmonized definition of safekeeping and record-keeping for ownership of securities. This in turn makes it difficult to apply custodial requirements to a new asset class such as cryptocurrency. ESMA believes that greater clarity around the types of services and activities that may qualify as custodial under EU financial services rules, in a DLT framework, is needed.
Custodial Services Are for Traditional Financial Banks
Paul Puey, CEO of cryptocurrency wallet Edge, explained that while there has been a rapid increase in custody solutions, this trend has been limited to the traditional financial world of banks and funds that don’t leverage any of the utility and value of crypto.
He said: “This would be akin to 1990s internet companies filing for telephone regulations to build VOIP solutions to replace phone carriers. Nothing very disruptive would come from that. Crypto is unique and powerful because custodians aren’t needed to hold digital value. We can replace institutional crypto investors with non-custodial apps that hold the money for users.”
It can be argued, however, that custody services are critical to the efficient functioning of financial markets. As highlighted above by the SEC and ESMA, these often require regulation in order to protect investors from potential misappropriation of their assets.
Michael Ou, CEO of Coolbitx, explained that regulatory factors will play a big role in driving compliance efforts of digital asset exchanges, particularly those in the U.S. or serving U.S. customers, saying:
Custody providers face a simple fact: KYC/AML compliance is a major time and resource strain. In traditional finance, you will hardly see a single entity offering KYC/AML compliance, a large marketplace of buyers and sellers, custody, and all other services that a single exchange offers now.
He explained that as the market matures, so does the division of labor within the market. Therefore it is far easier for exchanges to work with entities specializing in custody. According to Michael Ou, investors can expect to see custody solutions become a mainstream component of the cryptocurrency industry in the months and years ahead.
What are your thoughts on the growth of crypto custody solutions? Let us know in the comments section below.
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The post Why Cryptocurrency Custody Solutions Are on the Rise appeared first on Bitcoin News.
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Last year the Bitcoin Cash (BCH) community welcomed a BCH-based social media network called Memo.cash. Since then Memo has gathered a lot of traction with hundreds of profiles and thousands of onchain updates and conversations posted to the BCH chain.
Memo’s Uncensorable Posts Continue to Grow
In April last year, news.Bitcoin.com reported on the social media platform Memo.cash, a decentralized app powered by blockchain technology. The platform gives anyone the ability to create a profile, post messages, and send and receive tips as well. Nearly every action on Memo is recorded on the BCH chain using an OP_Return transaction. After the BCH blockchain split on Nov. 15, the creator of Memo decided to open the platform to users of both sides of each chain and now there is a Memo SV version of the site as well. Existing users who haven’t logged on since the fork can use the same login credentials for the SV section of the platform.
Since we first reported on Memo, there was another social media platform for the BCH chain called Blockpress, but the application has been defunct for quite some time. Memo, on the other hand, has continued to grow with users and content is being shared constantly. For instance, Memo’s feeds are broken down into six sections, which comprise ranked, polls, threads, top, new, and archive posts. Similarly to Twitter, when writing a new memo users can utilize 217 characters per post. If an individual decides to create a poll, then they have to first create a question (209 characters) and then add two options (184 characters per option) for people to choose.
Memo users can post text, videos, pictures, and even embed tweets from Twitter on the application. Moreover, individuals can search the index of registered users by perusing a list of profiles that are also sectioned into different criteria like most followed and oldest, which shows the first Memo accounts created. The most followed Memo profile is the creator of the platform, with 777 followers, and the first account registered belongs to a user named Jason who has 142 followers.
Poster.cash and Unwriter’s Bitdb
Then there’s Poster.cash, a Bitdb-powered Memo extension protocol built by the software developer Petar Mitchev. The Poster application allows users to utilize most of Memo’s actions, which are performed in-browser. Poster provides infinite scrolling and the ability to track certain keywords as well.
Similarly to the Memo protocol, Poster also gives users the choice to toggle between the BCH and SV network depending on their preference. Because Poster is powered by the developer Unwriter’s Bitdb network, it works as a serverless application. Mitchev gave props to Unwriter for creating the Bitdb and Bitsocket applications and noted, “I still can’t believe I wrote an actual serverless Memo implementation — And it works so nice.”
Overall, Memo continues to see lots of people posting uncensorable media and the extensions people have built around the protocol have made Memo’s ecosystem more robust. Of course, with the application serving both networks, there’s a fair bit of arguing between both camps when scrolling through the last few weeks of Memo posts. The Memo application also supports hashtags and many people add their favorite tags to posts. Popular hashtags at the moment are bitcoin cash, BCH, BCHPLS, roblox, and hashwar.
What do you think about the Memo.cash application for the Bitcoin Cash network? Let us know what you think about this platform in the comments section below.
Images via Shutterstock, Memo.cash, Poster.cash, and Pixabay.
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The post With Deplatforming on the Rise, Onchain Social Media App Memo Shows Promise appeared first on Bitcoin News.
Cryptocurrencies grew immensely popular in 2017, but throughout the following year, digital asset markets fell sharply in value. However, over-the-counter (OTC) market makers thrived in 2018, with a slew of business models in the industry catering to OTC clients.
Billions Swapped Using Over-the-Counter Cryptocurrency Services in 2018
Even though digital currency markets dropped considerably in value in 2018, early investors and crypto whales who believe in the future of this asset class stocked up. Long term supporters will cost-average their positions by gaining as many coins as they can because they grasp the idea of digital scarcity. One business model that’s been thriving in 2018 is OTC crypto dealers or brokerage providers. Whales and big investors don’t purchase thousands of coins with traditional exchanges, because the premium for the trading fees would be outrageous. Instead, they use OTC providers like Circle, Itbit, Coincola, and Cumberland Mining. Other buyers will connect with miners and pool operators while other businesses and individuals will deal with Telegram, Wechat, and Skype OTC groups. This past April, reports revealed that cryptocurrency-based OTC desks using Skype have traded billions.
This year, many companies that had already provided digital asset exchange services have announced opening OTC desks for institutional clients. In June, Etoro announced opening an OTC platform for institutional buyers, and in May the OTC cryptocurrency service Genesis Global Trading received a Bitlicense to operate in New York. Blockchain.com started OTC operations in September and Coinbase and Hodl Hodl announced the launch of OTC desks in November.
After China banned crypto exchanges last year, over-the-counter trading started heating up. Throughout 2018 there were reports of a flourishing and unregulated OTC market in China. Last April, an executive at Overseas Chinese Investment Management, John DeCleene, described how bitcoin mules were making lots of money smuggling the cryptocurrency into the country.
“Selling and buying bitcoins on those OTC websites is the same as shopping on Taobao,” explained one of the bitcoin smugglers in an interview with Reuters.
Average Joes Don’t Use Crypto-OTC Desks as Bulk Rates and Private Quotes Have a Minimum Membership Requirement
Last week, the crypto options market Skew gave an insightful description of how over-the-counter operations work if a customer wants to buy 1,000 BTC from an OTC desk using Telegram or Whatsapp. Tens of thousands of dollars can be saved buying in quantity and most OTC programs have a $ 50,000 or more minimum to use their services. For instance, those who want to join the onboarding process and trade with Cumberland Mining must understand that the minimum trade size is $ 100,000 before continuing to fill out the required know-your-customer (KYC) information. Cumberland has been around since 2014 and is owned by the 25-year old Chicago trading firm DRW.
“We’re dedicated to delivering professional onboarding and relationship management, timely and efficient settlements, and 24⁄7 access to a unique depth and breadth of crypto-assets,” explains Cumberland Mining’s website.
OTC desks deal with a large network of mining operations and exchanges in order to serve as market makers and provide liquidity for trades. Even regulated OTC dealers use private chat rooms on Skype, Telegram, Whatsapp, and Wechat for quotes, discussions, and executing trades. Whales trading with established OTC providers use platforms that provide top of the line security like cold storage and multi-signature settlement. Like the neighborhood convenience store, a lot of the OTC desks today are open for trades 24/7.
The data stemming from 2018 and the spate of companies announcing new OTC operations indicates there’s a lot of demand for market makers executing huge trades on secondary markets. The growth of these types of businesses also shows how OTC markets have thrived despite a year of bearish cryptocurrency prices.
What do you think about the growth of over-the-counter cryptocurrency operations in 2018? Let us know what you think about this subject in the comments section below.
Images via Shutterstock, and Pixabay.
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The post Bitcoin Whales and the Rise of Crypto-Fueled OTC Desks in 2018 appeared first on Bitcoin News.
In 2018 there was a rapid decline in initial coin offerings, a slowdown in blockchain business launches, and a bearish crypto market. During this period, companies with good liquidity have been scaling up and strengthening by acquiring startups.
Also Read: Global Cryptocurrency M&As Rise
M&A Deal Frenzy in 2018
In 2017 the number of cryptocurrency and blockchain companies that launched more than doubled compared to the year prior. The current bear market that has since come to characterize 2018 has proven the ideal time for institutional investors and venture capitalists to make a land grab and acquire innovative startups.
There’s been something of a deal frenzy involving cryptocurrency and blockchain-related companies seeing mergers and acquisitions (M&A), which have increased by 200 percent in 2018. M&A is the lifeblood of Wall Street and this activity is expected to continue to accelerate within the cryptosphere as we head into 2019.
In an interview with news.Bitcoin.com, Danish Saxo Bank founder Lars Seier Christensen revealed that he is actively searching to acquire crypto businesses, saying: “I am also looking at a couple of serious fund vehicles that do extensive research across the space. Because of course there will be some gold nuggets that have been dragged down unfairly in this bear market as happens in all bear markets.”
According to JMP Securities’ head of blockchain and digital assets investment banking, Satya Bajpai, the industry is witnessing a “land grab” for innovative technology, access to new markets, intellectual property, and talented employees through M&A, reports CNBC.
The most recent data from JMP Securities and data from Pitchbook shows 115 deals have already been announced globally this year, with roughly 30 more expected by the end of this year. This compares with just 47 mergers and acquisitions that were completed in all of 2017.
Rundown of Key M&A Deals From 2018
There have been a number of key crypto and blockchain acquisitions this year, with one of the most active companies being Coinbase. The California-based exchange has not allowed diminished trade volumes to keep it from actively acquiring startups. Earlier this year, there were also rumors about a potential acquisition of Coinbase by Facebook, though this appears to have been little more than speculation.
Coinbase acquired decentralized ERC20 trading platform Paradex. The company also acquired Earn.com for an estimated $ 100 million, a platform that lets users receive cryptocurrency for answering emails and completing tasks.
Another notable acquisition involved Goldman Sachs startup Circle which acquired cryptocurrency exchange Poloniex.
Coinsource, a Texas-based cryptocurrency ATM operator, became the first digital asset ATM provider to be granted a Bitlicense in the state of New York.
Japanese insurance group Sompo Holdings acquired a 10 percent stake in Bitpesa, a Kenyan digital currency exchange and payments company.
Trade.io acquired British brokerage firm Primus Capital Markets for an undisclosed amount to offer BTC-backed Forex trading.
Consensys, the software company established by Ethereum co-founder Joseph Lubin, acquired struggling space startup Planetary Resources.
Japanese mega ecommerce and internet company Rakuten Inc. entered the crypto space by acquiring an existing crypto exchange to fast-track its wat into the Japanese cryptocurrency market.
Shapeshift completed the acquisition of Bitfract, a software firm which operates a service that allows users to swap from one cryptocurrency to many in an instant.
Ernst & Young, one of the major global accounting firms, acquired technology assets and related patents from Elevated Consciousness.
Blockchain research and development firm Nchain announced the acquisition of a majority stake in the Bitcoin Cash-centric startup Handcash.
Chinese bitcoin company BTCC was acquired by a Hong Kong-based investment fund.
It seems the market downturn that has pervaded through 2018 has been the ideal time for large corporations to snag a good deal and secure a stake in the future of the rapidly developing crypto space.
Will M&A activity continue to accelerate as we head into 2019? Let us know in the comments section below.
Images courtesy of Shutterstock.
Need to calculate your bitcoin holdings? Check our tools section.
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