February 26 – March 4, 2018 | Goldman Sachs, Walmart & More Crypto News
3iQ Research Group consolidates the top five cryptoasset stories of interest
to investment advisors and our investors.
Goldman Sachs-backed Startup Buys Major Crypto Exchange
February 26, 2018 – Circle, a peer-to-peer payments technology company backed by Goldman Sachs, has announced the acquisition of the major US cryptocurrency exchange Poloniex. Poloniex has been a preferred exchange for trading bitcoin and other cryptocurrencies such as litecoin. Rumours about the deal had been circulating for a few weeks prior to the announcement on Feb 26th. Circle is reported to have paid roughly $400 million to acquire the exchange. The news coincides with the strong price action this past week on major cryptocurrencies such as bitcoin and litecoin.
Poloniex has been around since 2014; prior to the stiffer competition seen in recent years, Poloniex was one of the largest exchanges in the world. Commenting on the purchase, Circle says they plan on expanding Poloniex’s services to “something beyond an exchange” for only crypto assets.
March 1, 2018 – Wellington Management Co., a Boston based investment management company, is considering including cryptocurrencies in certain portfolios. The $1 trillion-dollar firm reports its systems were recently updated to enable trading in bitcoin derivatives. Wellington stresses that, for the time being, it is not taking direct cryptocurrency exposure, but rather focusing their investigation on other derivatives.
“Various Wellington teams are already positioning portfolios to take advantage of mining and blockchain implementations by, for example, investing in select chipmakers making components”.
Digital Currency Group Invests in Crypto-Friendly Bank
March 1, 2018 – Silvergate Bank has been a leader in supporting bitcoin-based companies over the last few years. The bank has been known for providing financial services to crypto companies, while other banks remain hesitant on providing support. According to Silvergate, the bank already has relationships with fifteen crypto-based companies. The company recently raised $114 Million USD in a private placement, and a major venture capital firm took a stake.
Just a couple hours after the closing announcement of Silvergate’s private placement, New York-based Digital Currency Group (DCG) revealed they took a major stake. The announcement from DCG coincides with their welcoming of Poloniex to DCG’s investments, which was recently acquired by a Goldman Sachs-based startup Circle, in which DCG had a stake.
March 2, 2018 – Food products and other perishable goods that require temperature control are particularly difficult to ship, sparking a need for further innovation. Online shopping for these products poses some shipping challenges for retail giants such as Walmart, but blockchain technologies could provide a solution.
On Thursday, an application released by the US Patent and Trademark Office reveals that Walmart is looking to implement blockchain-based technology to create a “smart package” delivery system. Walmart describes their “smart package” as one that includes a device to record information on a blockchain, such as its contents, its environmental conditions, and its location. Utilizing blockchain technologies for food provenance can create a value-add for food producers, and bring transparency to consumers. Walmart also highlights that its smart package would be a great fit with other emerging technologies such as drones and autonomous vehicles.
Germany Recognizes Bitcoin as Legal Tender, Updates Taxes
February 28, 2018 – Germany’s Ministry of Finance published a guidance report on February 27th stating that they won’t be taxing crypto users for using cryptocurrencies as a means of payment.
In the US, the Internal Revenue Service still recognizes bitcoin as property which is taxable. If a consumer purchases coffee with cryptocurrencies in the US, it would be considered a sale of property, rendering it subject to capital gains tax. Instead, Germany will recognize bitcoin as the equivalent to legal tender like the euro.
When a coffee buyer pays with bitcoin, application of EU’s VAT Directive will apply to the current price of bitcoin when the transaction occurs. If a user converts bitcoin into euro, or vice-versa, it would be regarded as a “taxable miscellaneous benefit”.
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