April 15 – 21, 2019 | Endowment Funds, Crypto Regulations & More Crypto News
3iQ Research Group consolidates the top five cryptoasset stories of interest
to investment advisors and our investors.
Study: 94% of Surveyed Endowment Funds Allocate to Crypto
April 15 – A new study has determined that around 94% of surveyed endowment funds have already allocated to crypto-related investments. The study was conducted in Q4 2018 by Global Custodian, The Trade Crypto, and BitGo. Out of 150 surveyed endowments, 89% of the respondents were reportedly based in the United States, with the rest either in the United Kingdom or Canada. The survey concluded that endowment funds are allocating either through direct cryptoasset exposure, or through various types of crypto funds. According to those surveyed, the three most important criteria for selecting crypto-related funds are that they comply with regulatory oversight, have sufficient capital flows and liquidity, and their ability to offer account security. “All the talk over the past 18 months has been around when institutional investors will begin participating in cryptocurrency investments, but it turns out they had already arrived, in the form of endowment funds,” said Jonathan Watkins, the managing editor at Global Custodian.
Report: The Cryptocurrency Bear Market Could be Over, Moving Into Accumulation Phase
April 19 – A new report by Adamant Capital has found that the bear market in cryptocurrencies has come to an end and may already be in its accumulation phase. The report noted that the accumulation phase is expected to bring bitcoin (BTC) to trade between $3000 USD and $6500 USD before entering its new bull market. Interestingly, the report highlighted that most retail traders have since left the asset class, and agnostic traders and other long-term investors currently dominate most of the trade of bitcoin. Adamant Capital utilized a volatility lows analysis to help draw their conclusion, along with other technical indicators. The volatility lows analysis included the 60-day volatility of bitcoin, which according to the report, dipped below the 5% mark. This low point in volatility coincides with the accumulation phase in bitcoin which occurred in late 2016. “During the accumulation phase, the market will trade in a range: the weak hands, who are trying to get out of the market, take profit during rallies and thus create the resistance, and the strong hands, looking to accumulate, buy at the bottom of the range which eventually creates a floor in the piece,” said the report.
France Asks EU Partners to Adopt Their Crypto
April 15 – Bruno Le Maire, the French Finance Minister, has announced that France intends to push the European Union (EU) and its member countries into adopting France’s new regulatory framework for cryptocurrencies. Last week, the French parliament approved a bill that would allow companies to apply for a certification that will let them issue new cryptocurrencies or trade existing cryptocurrencies. The bill is the first of its kind which has been adopted by a leading country. The bill will allow French authorities to identify those behind new coin issuances and exchanges, enforce anti-money laundering (AML) rules, and verify business plans. The bill also gives these companies official recognition and allows the country to tax their profits. “I will propose to my European partners that we set up a single regulatory framework on crypto-assets inspired by the French experience,” said Le Maire at a blockchain technology event in Paris. “Our model is the right one.”
Microsoft and Enterprise Ethereum Alliance Team Up to Bring Blockchain Providers Together
April 17 – Microsoft has teamed up with the Enterprise Ethereum Alliance (EEA) to help bring major blockchain providers together to help businesses design and implement their own crypto tokens. The EEA is a non-profit organization that helps create specifications standards for businesses that use the Ethereum blockchain and its technology. The EEA acts as a host for the “Token Taxonomy Initiative”, which also supports other blockchain technologies such as Hyperledger, Corda, and DAML. Members of the Token Taxonomy Initiative include Intel, JP Morgan, and Banco Santandar, among other firms. According to the executive director of the EEA, Ron Resnick, the Token Taxonomy Initiative will be a composition framework that will help standardize token technologies across multiple networks. “We are doing this for the greater common good. Standardizing tokens across all networks could hold the key to one of the greatest economic opportunities in modern history.”
Japanese Regulators Want More Internal Oversight of
Exchange Cold Wallets
April 2 – Japanese regulators will now require cryptocurrency exchanges to strengthen the internal oversight of their cold storage wallets. Cold storage wallets are used by cryptocurrency exchanges to store client cryptocurrencies offline so they cannot be stolen by external hackers; however, the Financial Services Agency (FSA) of Japan has noted that there is an internal risk associated with cold storage wallets. Internal theft remains an issue for the regulator, citing that some cryptocurrency exchanges have failed to implement rules to counter thefts made by employees with control to the private keys to these wallets. Some rules, such as a regular rotation of the employees who are in charge of the cold storage wallets have still not been addressed by several exchanges. The exchanges that the regulator has identified of being at risk for lack of internal control have not yet been made public.
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