The Blockchain Weekly Front Page is a CXO level briefing. Our mission is to serve the mainstream business community by selecting one major theme in the Blockchain Economy each week and three news stories to illustrate that theme. This is all you need to know, each week, jargon free for CXO level business leaders and investors who will use this technology to change the world, in your email inbox each Monday at 7am CET.
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Last week our theme was Gaming on Blockchain.
Cryptocurrency prices have been tumbling since the beginning of the year and many are debating if they will recover. In the last nine months, even after an 80% correction for cryptocurrencies and a 69% drop in the price of Bitcoin, the cryptocurrency industry has continued to grow stronger, with the stakes remaining very high.
The sentiment about long-term potential for cryptocurrencies and blockchain, still remains bullish. At least 59% of accredited and 72% of retail investors confirm they are planning to buy more coins in the next 12 months, according to a survey published this summer by investment platform SharesPost.
This is driving many companies to double down. The big bet is on how to bring in the next wave of retail crypto traders and investors.
Let’s face it, despite the allure of owning digital assets, most people don’t want to, or don’t know how to safely manage their private keys. Most people need something fast, reliable, mobile and intuitive, that will make it easy to get into the crypto market. And what we’ve been seeing is exactly that. Crypto companies creating mobile-friendly fiat on-ramps.
Coinbase is one of of the companies, and it recently announced the Coinbase Bundle, a market-weighted selection of the five cryptocurrencies. Users can buy a bundle of five cryptocurrencies (Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Ethereum Classic) for as little as $25.
On Twitter the Coinbase posted: “Bundles are a new way to buy crypto on Coinbase. You decide how much to spend. We deliver a market-weighted distribution of assets in your wallets.”
The Coinbase Bundle will launch in the United States and Europe over the next few weeks. Functionally it’s almost just like the Coinbase Index Fund. The main difference is that the Coinbase Index Fund is designed for accredited and more sophisticated investors, that want to spend a lot of money on crypto, while Coinbase Bundle is for unaccredited and unsophisticated investors. The name alone denotes its a cheaper investment vehicle. Investing in a Coinbase Bundle might be a quick and easy way to buy crypto, but it doesn’t necessarily minimize the risk, if for example the coins in the bundle take same downward direction.
We have also seen other companies, Revolute, Robinhood, Square and eToro, integrate crypto in their retail offerings, resulting in huge growth to their customer bases.
The Coinbase announcement is strategic for their position in the retail market, especially when you couple it with the announcement of Coinbase Learn, which tries to give basic knowledge to cryptocurrency newcomers, and Coinbase Asset Pages, a service similar to Coinmarketcap, that has detail information about the top 50 coins in the market.
This launch comes in the middle of fierce competition, which is going to get even more fierce. I think we can expect for the rest of 2018 to see more and more crypto custodians, with unique service offerings that cater to the retail crypto investor.
We are also seeing a lot of mobility from crypto companies, with plans to IPO. This week, Bitmain, the largest mining company in the world, filled for an IPO. Some are claiming that Bitmain is trying to untangle itself from the mess they’ve created and they see the IPO as a means to an end.
But, we’ve also been reading about Binance, Robinhood, Huobi, Canaan, Ebang. Lets not forget all the speculation and rumors about the Coinbase’s IPO in 2018. Also, in August, we had Argo, a mining operation, that listed on the London Stock Exchange, raising £25 million (USD $32.5 million) in investor capital.
If blockchain is the “internet of money”, then an IPO by unicorn crypto company, overseen by very serious regulators on an exchange like Nasdaq, would be a Netscape moment for the entire market. It would add another level of legitimacy to cryptocurrencies and blockchain, bring in serious money from both institutional investors and average consumers and potentially drive mainstream adoption by millions worldwide.
Yet, the single hardest problem in all of crypto is the on-ramp. Taking people’s money and handing them crypto for it. A couple of ex-USB bankers are trying to make it easier and bridge the crypto and fiat worlds.
They launched Seba Crypto AG, a Zug-headquartered company and secured 100 million Swiss francs ($104 million) from private and institutional investors. Their goal is to launch the world’s first regulated bank, that lets consumers easily swap dollars and euros into cryptocurrency.
Seba wants to be just like a normal bank, offering clients asset management products and investment banking services, but also allowing them to have both their crypto and fiat accounts under one roof. Investors will be able to securely use fiat cash from their accounts to invest directly into cryptocurrencies, while receiving full protection.
Banks have been hesitant to work with an industry, in which due diligence checks were rarely performed during ICOs a year ago. This has caused an enormous strain to crypto startups, that have faced problems with banks that refuse to open bank accounts for them, primarily because of concerns related to anti-money laundering rules.
The challenges of integrating into the traditional financial system, has driven many startup to seek out alternatives in countries such as Liechtenstein, Gibraltar and Malta. While there are some banks in these jurisdictions that allow cryptocurrency companies to open a bank account, the process can be grueling and the fees much higher than for normal accounts.
In an effort to ease the pain of cryptocurrency startups, the Swiss Bankers Association (SBA) published new guidelines for opening corporate accounts for blockchain startups. The aim is to make it easier for banks to deal with cryptocurrency startups, while lowering the risks involved in offering services to the crypto industry.
In the crypto world, SEBA is not the only company that is trying to build a crypto bank. Bank of America has filed a patent related to cryptocurrency custodian system. BoA is proposing a computing system that will act as digital vault storage for the crypto assets of large-scale enterprises. Also, Circle is attempting to secure a banking license in the United States.