September 17 – 23, 2018 | Canadian Regulators, ETF Delays & More Crypto News
3iQ Research Group consolidates the top five cryptoasset stories of interest
to investment advisors and our investors.
Howard Atkinson: Bitcoin Regulation “Should be Now”
September 18 – Howard Atkinson, chairman of 3iQ Corp and the former president of Horizons ETFs, has expressed frustration that regulators have not been able to establish a secure regulatory framework for cryptoassets. In their recent white paper, 3iQ Corp highlights that Canadian retail investors are being exposed to unnecessary risks by investing in Bitcoin through exchanges which often operate outside of Canada. Howard Atkinson believes that there is a need for fully regulated Bitcoin funds to increase investor comfort and to help build an industry in Canada.
“We think regulation should be now. The regulators have done otherwise thus far. We’ve been working with the Ontario regulator for almost for two years and we have proudly gone through the front door and worked with them,” said Atkinson. “We continue to address their issues and questions and feel that every time they’ve come back with issues and questions, we’ve been able to satisfy properly all their questions and provide that level of comfort that investors should have if they are going to invest in the space. I guess what’s been frustrating for us is that we’ve seen others not go in the front and do reverse takeovers and then end up owning crypto assets in a listed security without all the benefits of the regulations that should be put in place to give investors comfort to invest in these securities.”
September 20 – The US Securities and Exchange Commission (SEC) has again pushed back their decision on a Bitcoin ETF, expressing the need for more feedback before approval. The SEC has already received more than 1400 comment letters on a proposal from Van Eck Securities Corp. and SolidX Management. Unlike other proposed ETFs, the Van Eck and SolidX ETF will be physically-backed, whereas other proposed ETFs are expected to be priced on exchange indexes or futures contracts.
The SEC has invited for more feedback and comments, and those who wish to comment will have just 21 days after the order from the SEC is published to the Federal Registrar, and rebuttals will have just 35 days from that published date. The SEC is still investigating and seeking views on market manipulation and surveillance. In particular, the regulator wants to know if Bitcoin is less susceptible to market manipulation than other commodities that back ETFs.
Fidelity Investments May Release Crypto Products by End of Year
September 19 – Fidelity Investments, one of the world’s largest asset managers, is reportedly exploring cryptocurrency projects and expects to have a product announcement before the end of the year. Back in June 2018, there had been speculation that Fidelity may be entering cryptocurrency market through a cryptocurrency fund, or through the creation of an exchange. Last week at the Boston Fintech Week conference, Fidelity Investments’ CEO Abigail Johnson announced that the company is still exploring plans to move into the cryptocurrency industry. “We’ve got a few things underway, a few things that are partially done but also kind of on the shelf because it’s not really the right time. We hope to have some things to announce by the end of the year,” said Johnson.
The announcement by the end of the year will help solidify the entry of large institutional investors into the cryptocurrency industry. “What we started with was building a long list of use cases for either Bitcoin, Ethereum, other cryptocurrencies, or potentially just raw blockchain technology. Most of them have been scrapped by now or at least put on the shelf. The things that actually survived were not the things I think necessarily we expected. We were trying to listen to the marketplace and anticipate what would make sense,” said Johnson.
September 20 – Michael Novogratz, a former hedge-fund manager and founder of the cryptocurrency firm Galaxy Digital, believes that the cryptocurrency market has found a bottom. At the Yahoo Finance second annual All Markets Summit, Novogratz describes that the cryptocurrency market is currently experiencing “seller fatigue”. In addition, Novogratz believes that the largest cryptocurrency by market capitalization, bitcoin, is now in an upswing and showing signs of life. “Bitcoin has held $6,000. Yes, it is off its highs, but it has established itself as a store of value,” said Novogratz.
Novogratz has been one of the most outspoken advocates of bitcoin and cryptocurrencies on Wall Street. He believes that despite the slump in cryptocurrency prices, larger institutional players entering the market could take prices higher. Novogratz believes that banks may experience “FOMO” (fear of missing out) on the current cryptocurrency trend. “I think institutions are moving towards investing. It’s shocking how much has happened,” said Novogratz.
Goldman Sachs Alumni Crypto Fund Expands Workforce, Opens New Office
September 17 – BlockTower Capital, a cryptocurrency hedge fund co-founded by former Goldman Sachs investment manager Matthew Goetz, has reportedly increased its workforce this year and opened a second office despite falling cryptocurrency prices. BlockTower Capital, which has its headquarters in Stamford, Connecticut, opened up a second office in New York just last month, and now employs 13 people, up from about 8 from the start of the year. BlockTower Capital’s expansion signals that despite falling cryptocurrency prices, cryptocurrency hedge funds still haven’t been wiped out. According to the EurekaHedge Cryptocurrency Hedge Fund Index, cryptocurrency funds are down about 52% this year, while Bitcoin is down about 54% from the start of the year.
Jessica Schaefer, who speaks on behalf of BlockTower Capital, has confirmed that the company has opened a second office and continues to expand its employee roster. The firm has also hired a number of industry professionals, including Corey Miller, from the venture capital firm Scout Ventures. The firm has also picked up Siyu Dai, a quantitative trader and algorithm developer at Bank of America Merrill Lynch and Nomura, and Steve Lee, a former trader at Goldman Sachs in Tokyo and Singapore.
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