November 5 – 11, 2018 | VanEck Bitcoin ETF, Canadian Vaults & More Crypto News
3iQ Research Group consolidates the top five cryptoasset stories of interest
to investment advisors and our investors.
VanEck: Bitcoin ETF Could Attract Billions in New Investment
November 10 – Gabor Gurbacs, a renowned crypto exchange-traded fund advocate and the director of digital assets strategy at VanEck, believes that a Bitcoin ETF could help bring in billions of dollars in investments to the industry. In a recent interview, Gurbacs notes that the US Securities and Exchange Commission (SEC) should treat any pending proposals as an avenue to regulate the cryptocurrency market. While the SEC has rejected several of VanEck’s proposals for a Bitcoin ETF so far, VanEck deeply believes in the merit of a public ETF and continues to proactively work with the SEC to create an approvable product.
VanEck has made news headlines as they are looking to manage the first Bitcoin ETF. In 2018, it is estimated that VanEck has approximately $47 billion USD in assets, making it one of the largest asset managers seeking a tradeable Bitcoin ETF on a major financial exchange. A key differentiating factor between VanEck’s Bitcoin ETF is that it is physically-backed, and not a futures-based fund. “What sets our ETF apart is that it’s a physical Bitcoin ETF. So, it stays true to the bitcoin you own in underlying,” said Gurbacs. “It’s fully insured so if there is any theft, hacks or losses; then the insurance covers it.” Interestingly, Gurbacs makes a comparison between Bitcoin and gold, noting that “our gold ETFs are already in a few billion dollars range. There are gold ETFs in $10 billion range as well. I wouldn’t be surprised if a Bitcoin ETF gets in a few billion dollars range.”
Canadian Bank Launches a Vault for Cryptocurrencies
November 9 – VersaBank, one of the smallest Canadian banks by assets, has announced a cryptocurrency vault storing system which it hopes will help expand its market share with services in the crypto industry. The vault storing system is called the “Digital Safety Deposit Box”. The custodial system aims to target cryptocurrency trading platforms and other crypto investment funds. The Digital Safety Deposit Box uses a multi-signature identification system as part of its security process. The bank had previously announced the project back in February this year, and after several months of testing, VersaBank has decided to do a full launch.
The storage system works as a vault service, which means that the bank would break the digital assets up into separate parts (since separate fragments have no value) and then store them in actual vaults. “The beta testing, conducted with our initial target client base, focused on ensuring VersaVault’s design would meet the specific requirements of cryptocurrency exchanges and crypto funds,” said the bank. “VersaVault does not have the ability to ‘drill’ into a client’s digital safety deposit box, nor does it have the ability to look inside, only the client has the capability to access their digital valuables and only they know of their contents inside.”
$43 Million USD in Bitcoin Trades Helps Boost Square’s Q3 Earnings
November 8 – Despite the cool-off in cryptocurrency prices this year, the financial services company Square had revealed that their Q3 crypto revenue was up $6 million USD, and posted a profit of $500,000 USD. While these numbers may seem small, they could represent a big step forward for cryptocurrency and bitcoin-related payments, particularly because critics had prevoualy argued that the company’s move into cryptocurrencies was going to be a money losing venture.
In their shareholder letter and quarterly earnings on November 8, the company revealed that the BTC division for the payment company had continued to climb through 2018. While some have argued that this provided trivial changes to Square’s bottom-line, the company reported that the addition of Bitcoin helped fuel 8% of the growth over last year’s Q3 numbers. “Total net revenue was $882 million in the third quarter of 2018, up 51% year over year. This includes $43 million of bitcoin revenue…Excluding bitcoin revenue, total net revenue was $839 million, up 43% year over year,” said the company in the shareholder letter.
October 31 – The former chairman of Google and renowned billionaire Eric Schmidt believes that Ethereum could be a “powerful platform” and its full potential is still yet to be seen. Schmidt made the remarks during a live event with the popular economist Tyler Cowen, which was hosted by Village Global in San Francisco. Schmidt believes that exciting developments are occurring with Ethereum, and many of which could revolutionize business and society in the near future. Schmidt was also asked whether he thought that blockchain was either overrated or underrated. “In the public format, overrated. In its technical use, underrated,” said Schmidt. “Today, blockchain is a great platform for bitcoin and other currencies. And it’s a great platform for private banking transactions where people don’t trust each other.
“I think the most interesting stuff that’s going on are the beginning of execution on top of blockchain — the most obvious example being the capability of Ethereum,” Schmidt said. “And if Ethereum can manage to figure out a way to do global synchronization of that activity, that’s a pretty powerful platform. That’s a really new invention.”
BitMEX and CryptoCompare Release Cryptocurrency Exchange Research Report
November 1 – The major cryptocurrency exchange BitMEX has published an in-depth research report about the current landscape of crypto exchanges. Their report begins by listing some of the most important events and news that impacted cryptocurrency exchanges this year. Some events that were highlighted had a significant impact on some cryptocurrency exchanges’ data. The report later compares the volumes of different exchanges, both centralized and decentralized. Interestingly, the report notes that total spot volumes made up less than three-quarters of the total market volume. For spot volumes, exchanges that had taker fees represented about 90% of all volumes, while those that had transaction fees represented only 10%.
Additionally, the report noted that exchanges that pair cryptos with fiat currencies produced almost a quarter of all spot market volumes. The report concluded that there was a vast difference between exchanges in terms of the amount of daily volume (and therefore relative cost) that would be required to take prices up or down as desired by traders. The cryptocurrency exchanges ItBit, Kraken and Bit stamp “have relatively more stable markets when compared against lower volume exchanges such as LBank, CoinEx, ZB and Coinbene”.
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